What Are the Investment Decisions to Consider with RSUs?

Graphic of a person juggling small icons. Icons include piggy bank, credit card, shield, coin, and stock ticker to illustrate the investment decisions of restricted stock units like tax.

Restricted Stock Units or RSUs are an amazing employee benefit. However, there are investment decisions to consider when looking at RSUs. For instance, the tax implications of restricted stock units or liquidity.

Be Sure to Read:
  1. What are RSUs?
  2. Should I Hold My RSUs After Vesting?

If an employee receives RSUs as compensation, their gut instinct may be to hold the shares of stock for the long run. This decision may seem like a simple one, but below the surface there are several items to take into consideration.

Investment Decisions to Consider:

Taxes will play a significant role in the decision making when it comes to RSUs. Remember, the tax of restricted stock units are like wages when they become vested. However, RSUs can then be taxed again at short-term or long-term capital gains rates depending on how long you hold the stock. So, if the stock grows 10x in the 2 years, owners have to be prepared to pay the tax on the RSU when it’s sold. This has the potential to create other tax issues for individuals and their families as well.

Risk Tolerance

One of the main factors of RSUs investment decision is risk tolerance. Risk tolerance is a measurement of an investor’s degree of risk they are willing to take to achieve a desired outcome. The riskier an investor is, the higher their risk tolerance will be. Further, if an investor has a variety of stocks and bonds held, then the better their diversification becomes. Diversification directly correlates with risk as well because an increase in diversification may result in a lower risk level of any given portfolio. Since RSUs are tied to the value of a specific stock, they inherently hold more risk than a diversified portfolio. While there is no guarantee that a diversified portfolio will outperform a non-diversified portfolio in any given market environment, it is important to consider.


Liquidity is also an important consideration before making an investment decision. When looking to hold RSUs or not individuals should examine their checking and savings accounts and consider the following questions:

  1. Are they at a level that makes you feel comfortable?
  2. Do you have expenses, such as home improvement projects on the horizon that RSUs could help fund?

If an investor can’t commit to holding RSUs for longer than a year, then that may indicate selling to aid liquidity needs.

Current Allocations

Current investment allocation needs to be analyzed as well. Investors want to achieve a diversified portfolio. Therefore, if a portfolio is stock heavy, then adding RSUs could create unnecessary volatility.

Contact Perspective 6 Group with any questions about the investment decisions, such as the taxation of restricted stock units.

*Osaic Wealth, Inc. does not provide tax advice.

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