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Do Restricted Stock Units Limit Your Investment Growth?

by Donny Stock

During portfolio planning, executives and employees often wonder: Should I keep my RSU shares as they are, or is this the ideal time to sell? Others may wonder if now is a good time to unload financial holdings in light of the market’s current state of decline. The answer, like so many others in the realm of personal finance, is conditional on a number of variables. Discuss your best course of action with certified financial statements in Herndon, VA specialist.

The Bear Market We’re in Right Now, Exposed

The stock market as of September 22nd, 2022, is down significantly year-to-date. All three major indices are trading near their 52-week lows: the S&P 500, Dow Jones Industrial, and NASDAQ. However, the stock market still has room for improvement. Indeed, some industry insiders believe the markets will receive a bump in late 2022 or early 2023.

Get the Most Out of Your Resources by Spreading Out

In the aftermath of the present slump, investors who have well-diversified portfolios and are willing to take on additional risk may see big returns. Investors whose portfolios are unbalanced face higher risks and may find it more challenging to minimize and recover from losses. One of the most critical considerations when selecting what to do with your vested RSUs is whether and how much your portfolio is weighted toward equity in your company.

Consider the Following When Making Your Selling Decision

The decisions made in financial planning are never a “one size fits all” approach but must be tailored to each client’s specific needs. Achieving your goals requires a thorough appraisal of your current situation, your desired destination, and the timeframe in which you want to be there. If you’re trying to figure out what to do with your RSUs, consider the following:

Do already earned RSUs represent a significant portion of your investment portfolio?

In the world of finance, diversification is essential. In order to mitigate the effects of sector concentration and lower volatility, investors should diversify their holdings across a wide range of asset classes. You may be overexposed to the ups and downs of the stock market if a large portion of your wealth is invested in RSUs. Creating a more diversified portfolio can be accomplished by selling a portion of your vested RSUs and reinvesting the proceeds in other asset types. To add, regular portfolio rebalancing will keep your asset allocation in line with your long-term investing aims.

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