Your Complex Compensation Questions. Answered.

Most employees just need to invest a certain amount of their paycheck and let time work its magic — but it’s not as easy for equity compensated professionals! Between taxes, timing and stock valuation, every detail matters when it comes to achieving financial independence.

Let’s explore some common questions and concerns investors like you face — and how to address them.

“What Can I Do To Avoid Surprises At Tax Time?”

Not all compensation is taxed the same. Incentive Stock Options (ISOs) are taxed differently than RSUs. And RSUs are taxed differently than Non-Stock Options (NSOs).

What — and when — you exercise or sell might trigger avoidable Alternative Minimum Taxes (AMTs) or increase capital gains taxes down the road.

TIP: Consider exercising your shares in a lower-income year to reduce your tax burden.

Make the Most Appropriate Timing and Tax Decisions for Your Financial Future.

“What Mistakes Do Other Equity Compensated Professionals Make”?

Viewing your equity objectively can be difficult, if not impossible. After all, you’ve personally helped shape your company’s stock price. But emotional investing often does more harm than good.

TIP: Have a pre-defined plan to sell (e.g. when your shares comprise a certain percentage of your portfolio) as a way to remove some of your built-in bias.

Make Smarter, Unbiased Decisions.

“Should I Sell Some of My Equity Now? Or Wait?”

Usually, time in the market beats timing the market — but not necessarily if you’re equity compensated.

Knowing when to convert your stock to cash is key to maximizing your equity’s full value. Some will hold too long. Others will sell too early. In either case, timing counts.

CONSIDER: Is the stock trading above your exercise price? Do you know your exercise price?

Plan Your Path to Long-Term Wealth.

“How Can I Use My Equity to Achieve My Long-Term Goals?”

You might have all your eggs in one basket: your company’s stock — which will go up and down. Meaning your associated wealth will, too.

Highly concentrated positions can sometimes pose greater risk than reward. But diversifying cash from your equity positions among low-cost investments within your portfolio helps reduce volatility — while helping fund big purchases, fuel emergency savings and fulfill your retirement.

TIP: Weigh expense ratios and other hidden fees of potential investments to keep more of your profit.