Overview
Restricted stock units, often called RSUs, can feel exciting when they vest. They may represent years of work, a meaningful piece of your compensation, and a potential opportunity for future growth.
But they can also create a challenging question:
Should you sell the stock when it vests, or hold on and see what happens?
In this episode of Clear Money Talk, Tim Clairmont, MSFS™, LACP™, Wealth Advisor, and Tyler Andrews, CFP®, Wealth Advisor, discuss how RSUs work and why the decision to sell, hold, or diversify should be made with intention. Their conversation focuses on taxes, concentration risk, emotional attachment, and how company stock fits into the bigger financial picture.
RSUs Are Compensation First
One of the most important points from the episode is that RSUs are not just an investment. They are a form of compensation.
When RSUs vest, the value of the shares is generally treated as taxable ordinary income. That means the tax event usually happens when the shares become yours, regardless of whether you decide to sell or hold.
That distinction matters because many people assume the decision is primarily about taxes. Taxes are important, but they should not be the only factor. Once the shares vest, the question often becomes less about compensation and more about investment strategy.
The Bigger Risk: Concentration
A major theme of the episode is concentration risk.
When someone works for a company and also owns a significant amount of that company’s stock, their financial life can become heavily tied to one organization. Their paycheck, benefits, career path, and investment portfolio may all depend on the same company’s success.
That can work out well if the company performs strongly. But it can also create risk if the stock declines, the company struggles, or the employee’s career situation changes.
Tim and Tyler discuss the importance of looking at company stock as part of total net worth, not just as a separate account balance. In general, they reference 10% as a useful rule of thumb when thinking about concentration in a single stock, while also noting that each situation is unique.
The Question That Can Clarify the Decision
One of the most helpful questions from the episode is simple:
If this showed up as cash instead of company stock, would you use that cash to buy the same stock?
That question can help remove some of the emotional weight from the decision.
If the answer is yes, holding may be worth considering, depending on your broader plan, risk tolerance, and tax situation.
If the answer is no, it may be a sign that selling or diversifying deserves a closer look.
The point is not that everyone should automatically sell. The point is that holding should be intentional, not accidental.
Taxes Matter, But They Should Not Drive Everything
Taxes are an important part of RSU planning. After shares vest, future gains or losses may create capital gains or losses depending on what happens next and how long the shares are held.
There may be situations where holding, selling gradually, or coordinating sales around income levels, relocation, or other planning factors makes sense. But Tim emphasizes that taxes should not become “the tail wagging the dog.” In other words, tax considerations matter, but they should not override the investment and risk management decision.
Emotional Attachment Is Real
Company stock can feel personal.
You may believe in the company. You may know the people, understand the product, and feel proud of your work. That can make it harder to sell, even when diversification may make sense.
The episode also discusses the emotional tension between fear of missing out and fear of loss. If you sell and the stock rises, you may wish you had held. If you hold and the stock falls, you may wish you had diversified sooner.
That is why having a disciplined plan matters. A plan can help reduce the pressure of making each decision based on emotion, headlines, or short-term stock movement.
The Bottom Line
RSUs can be a valuable part of compensation, but they deserve thoughtful planning.
The decision to sell or hold should consider:
- Taxes
- Concentration risk
- Your broader financial picture
- Your risk tolerance
- Your confidence in the company
- Your need for liquidity
- Your long-term goals
There is no one-size-fits-all answer. For some people, selling shortly after vesting may help reduce concentration risk and simplify planning. For others, holding a portion may make sense if they understand the risks and can afford the potential volatility.
The key is to avoid drifting into a large concentrated position simply because no decision was made.
For the full conversation, tune in to this episode of Clear Money Talk with Tim Clairmont, MSFS™, LACP™, Wealth Advisor, and Tyler Andrews, CFP®, Wealth Advisor.
