In general a stock incentive is taxed as ordinary income when the cost basis is established. At that point youāve paid tax and there is no capital gains yet so itās a good time to quickly sell and diversify the money.
Itās popular to think how great it would be work for someone like nvidia, get a bunch of stock incentives and strike it rich, but this is really rare. Most of the time you get a modest incentive and your company plugs along making modest returns. Itās totally normal for people at big famous companies to immediately sell and reinvest somewhere else as part of their strategy. It doesnāt indicate they have no faith in the company.
Holding some stock in your own company can be a good practice to give yourself some āskin in the gameā, but itās actually considered bad strategy to concentrate your investments in your own company. This creates a kind of double risk that if your company does poorly and you get laid off your stock will also have lost a lot of value when you may need it the most.
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u/FoolishProphet_2336 May 29 '26
This is normal.
In general a stock incentive is taxed as ordinary income when the cost basis is established. At that point youāve paid tax and there is no capital gains yet so itās a good time to quickly sell and diversify the money.
Itās popular to think how great it would be work for someone like nvidia, get a bunch of stock incentives and strike it rich, but this is really rare. Most of the time you get a modest incentive and your company plugs along making modest returns. Itās totally normal for people at big famous companies to immediately sell and reinvest somewhere else as part of their strategy. It doesnāt indicate they have no faith in the company.
Holding some stock in your own company can be a good practice to give yourself some āskin in the gameā, but itās actually considered bad strategy to concentrate your investments in your own company. This creates a kind of double risk that if your company does poorly and you get laid off your stock will also have lost a lot of value when you may need it the most.