Strategy for dealing with vested stocks over the next 3 years

Submitted by ArtaxIsAlive t3_11dhjht in personalfinance

Hi all, I was hoping for an external opinion on this situation I'm in with some vested stocks from my company.

I receive more company shares with my employer every three months, which will go until 2026. I can do whatever I want with the shares once they vest without any big effect (minus taxes, etc..).

When the 3 years are up I'll have a decent amount of shares but the value will vary based on how the market trends in that time period.

I want to be able to buy a second house in 5 years for my family and am thinking I can cash out the shares and use them for a downpayment.

My options seem to be:

  1. Cash it all out in 2026 when I get all the rest of the shares. The final amount of money will be unknown because they'll be riding the market the whole time.
  2. Keep a minimal amount of shares in the market, and cash out just the new shares as they're granted every 3 months. Deposit that money into a high yield savings. In 2026 after this is all over keep those shares in the market for the heck of it.

Would love your thoughts...?

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Comments

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weiner_forest t1_ja8nxk4 wrote

Assume you have $50k vested, ask yourself this question:

If you had $50k in savings right now, would you buy $50k worth of company stock?

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ArtaxIsAlive OP t1_ja8vbqf wrote

Probably not. I'm not a gambler and I don't see a gigantic bump coming in the company stock through a big reveal or something like that.

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Spylock99 t1_ja9lxl6 wrote

In general, it's not a great idea, from a risk perspective, to hold a large amount of company stock. You're already dependent on the company for your income via a paycheck. If the company has a downturn and lays off a bunch of people, including you, there's a good chance the value of the stock will also drop in that same downturn. So by holding company stock you are doubling up on the downside risk. Because both of these things are largely out of your hands the general wisdom goes, it's best to sell company stock as soon as you can.

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