🫶No need to panic and DM your math friend, we've got this together!
Employers are using stock options (ESOP), restricted stock units (RSUs), and employee stock purchase plans (ESPPs) to attract top talent and boost retention. If you're an employer and you're not = HINT-HINT!
💡Stock options give you the right to buy company shares at a set price within a certain timeframe.
🎉Stock goes up, exercise options = game-changer!
💔Stock goes down, running out of time on options = monopoly money value
Boooo to monopoly money and bad management!
Types of these fancy named "financial instruments":
✅Non-qualified stock options (NQSOs): are more common but come with a possible bigger tax bite.
✅Restricted stock units (RSUs): shares that vest over time, meaning they're yours to keep if you stick around long enough.
✅Employee Stock Purchase Plans (ESPPs) nearly free money! buy discounted company stock, often at a 15% discount. Possibly rinse and repeat.
Landmines to avoid:
⛔️Taxes. taxes and more taxes! Beware of the AMT, seek pro-tax help
⛔️Time. some of these vest based on time, so you need to be kind of marriage committal
⛔️Diversification. could have a heap of your portfolio tied-up in the same stock as the company you work for. Think horrendous management, downturns and layoff's risks.
Pro-tips:
✅Have an investment plan. work with a licensed Financial Advisor
✅Have a tax plan. Don't let a tax tail wag your investment dog
✅Negotiate. Use your Chris Voss skills and ask for them if you can't get a higher salary!
🧮No complex finance math in this post as promised. Do you have an ESOP plan? What do you think of it? ✏️Comment below.
No personal or tax advice should be construed from this post. This post is for educational purposes only.