Equity compensation can be a powerful tool for building long-term wealth if you know how to use it wisely. Here are three simple moves to maximize your earnings 👇
📅 Understand your vesting schedule
💸 Plan for taxes to avoid triggering a big tax bill
📊 Diversify your investment portfolio
Darin breaks these down in his latest Money Moves with Darin video. ⬇️
Have questions or want to talk through your own equity compensation strategy? You can reach him at [email protected].
Transcript:
Hey, everyone. Welcome back to Money Moves from Darin. Today, I wanted to discuss equity compensation. If you’ve ever received stock options, restricted stock units, or access to an employee stock purchase plan, you’ve been part of an equity compensation plan. But, how do you maximize it to grow your wealth? That’s a big question. Equity compensation is how many companies reward employees with a piece of ownership.
Done right, it can be one of the most powerful tools for building long-term wealth. Equity compensation can take several forms. Let’s break it down. There’s stock options, which gives you the right to buy company shares at a fixed price called the strike price. If a stock goes up, your gain is the difference. Then there’s restricted stock units or RSUs.
These are shares granted to you that vest over time. Once they vest, they’re yours. Typically taxed as income. Then, there’s employee stock purchase plan or ESPP, which allows you to buy a company stock at a discount through payroll deductions. A solid benefit if used wisely.
Now, let’s talk about how to maximize your equity compensation earnings.
- Understand your vesting schedule. Know when your shares become yours and plan your career and finances around those key dates.
- Know the tax implications. Equity compensation can trigger big tax bills if you’re not prepared. You want to work with a financial advisor or tax professional on how to plan for income from equity compensation to lower your tax bill.
- Diversify. It’s easy to become overexposed to your company’s stock.
Be intentional about taking some gains off the table and diversifying your portfolio. Equity compensation is more than a bonus. It’s a strategic asset. Planning is key, and you want to make sure it ties into the rest of your investment strategy. If you’d like to discuss your specific situation, you can reach out to me at [email protected]. For more insights like this, please subscribe to the Evans May Wealth YouTube channel, and please share with others who may find this information valuable. Stay tuned for the next episode of Money Moves with Darin. Thanks for watching.
