From Microsoft to Meta: How Top Tech Pros Are Navigating RSUs to Build Long-Term Wealth
How to Manage Equity Compensation and Taxes, while Building Long-Term Wealth
Let's face it—when you see those RSUs hit your account, it feels pretty great. But then the anxiety comes in. "What do I do with these things? When should I sell? How bad will the tax hit be? Wait, taxes? Were my taxes already accounted for?”
We get it. Your RSUs aren't just a nice bonus—they're becoming a significant chunk of your investable assets and that number is growing every quarter. Unlike your salary, they come with strings attached: vesting schedules, tax complications, and the ups and downs of your company's stock price.
We’ve advised numerous folks who are in your situation, watching that mix of pride and concern as they pull up their equity dashboard.
We created this guide because this conversation happens almost daily. I want to share what actually works—not theoretical advice, but strategies I've observed clients use effectively. The goal? To give you effective RSU planning strategies—based on real client experiences we've observed—to help you manage taxes, reduce concentration risk, and position equity compensation in pursuit of building long-term wealth.
Lets dive in.
Understanding Your Equity Exposure
We often hear this from clients at large tech companies (such as Microsoft, Meta, and Amazon). Your employer isn't just signing your paychecks—they're matching your 401(k) and they're handing you RSUs.
Think about it: your income, retirement savings, and growing equity position may all depend on one company's success. Diversifying your RSUs isn't about disloyalty to your employer; it's about protecting yourself from having too many eggs in one basket.
Strategic RSU Planning Considerations
1. Managing Concentration Risk
Here's a thought experiment we often walk through with clients: "If your company handed you $50K in cash instead of RSUs, would you immediately buy $50K of their stock?"
If your honest answer is no—then why hold onto those shares after they vest? Effective equity planning requires being truthful with yourself about how much single-company risk you're comfortable taking.
2. Overlapping Vesting Schedules
A typical scenario we see looks something like: "I'm on a four-year schedule and every year, I get another package as well, which usually begins to vest immediately."
This creates a situation where multiple grants vest simultaneously—each with their own tax implications. Creating a clear map of your vesting schedule is the foundation of effective RSU management.
3. RSU Tax Planning
When your RSUs vest, they're taxed as ordinary income. Most companies automatically sell enough shares to cover (”sell to cover”) the upcoming tax burden —but that's just the default approach.
Smart tax planning means looking beyond these automatic withholdings. We help clients identify opportunities for long-term capital gains treatment, optimize their selling timing around other income events, and incorporate strategic loss harvesting when it makes sense.
Case Study: RSU Diversification for a Home Purchase
Meet Alex: Senior Engineer at Microsoft
(Names and certain details have been changed for privacy)
Alex came to us with a situation you might recognize: after 7 years at Microsoft, they'd accumulated $300,000 in RSUs. Their shares were granted around $50 each but had grown to approximately $300—a notable return, but also a concentration problem.
Like many of our clients, Alex was planning to purchase their first home but worried about two things: having too much of their net worth tied to one company's stock and getting hit with a significant tax burden when selling shares for the down payment.
The Challenges We Tackled Together
When we mapped out Alex's financial picture, three issues became clear:
- Concentration risk: Over 60% of their net worth was riding on Microsoft stock
- Tax efficiency: Thanks to the gains, they faced a potentially large tax liability upon liquidation
- Timing pressure: They needed a down payment without being forced to sell at a bad time
Our Collaborative Approach
We started by sitting down with Alex to understand their comfort level with risk. Together, we established that no single stock should represent more than 25% of their portfolio—a balance between confidence in their employer and prudent diversification. This number is a bit different for everyone: striking the balance between what makes sense for you and your family is foundational to a sound financial strategy.
Instead of selling everything at once, we created a careful liquidation schedule that:
- Prioritized shares they'd held for over a year to capture long-term capital gains rates
- Worked around Microsoft's trading windows and blackout periods
- Strategized tax-loss harvesting opportunities during market dips
The Results That Mattered
Over the course of a few months, Alex had $100,000 in a high-yield savings account for their home purchase. The remaining proceeds were reinvested across a diversified portfolio that was designed to complement the concentrated nature of his Microsoft position.
Most importantly, Alex still participates in the company's success through new RSU grants but now feels more confident knowing their financial future isn't completely tied to one company's stock price.
Practical Implementation Strategies
1. Automate With Sell-to-Cover
Your company's automatic tax withholding is just the first step. The real question is: what happens to those shares after they vest? Having a plan prevents drift and indecision.
2. Systematic RSU Diversification
Remove the emotion from the equation by setting up regular, predetermined selling intervals. I often work withclients to consider selling 25% of newly vested RSUs each quarter. This approach can reduce the risk of trying to time the market and helps you maintain discipline regardless of stock movements.
3. Use the "RSU Cash Equivalent" Framework
Like we mentioned earlier in this piece, the thought experiment that cuts through emotional attachment: "If your company handed you $50,000 in cash instead of RSUs, would you immediately use all of it to buy company stock?”
This mental framework helps remove emotional bias from your decision-making.
If you wouldn't buy it with cash, why hold it after vesting? This simple question often provides clarity for our clients.
Common Mistakes to Avoid
I've guided numerous tech professionals through RSU planning, and these three mistakes appear most frequently:
- Emotional Attachment: Your loyalty to your company doesn't need to extend to keeping all your equity. Even executives diversify their holdings.
- Tax Paralysis: Yes, you'll pay taxes when you sell—but don't let tax concerns prevent smart risk management. Remember, concentration risk can outweigh tax optimization.
- Analysis Paralysis: Waiting for the "perfect time" to sell can often result in never selling at all. If we were to believe that even the best investors can’t effectively time the market, a systematic approach can often beat market timing over the long term.
When to Seek Professional RSU Planning Help
Consider professional guidance when:
- Your RSUs represent a significant portion of your net worth (commonly 20-25% or more)
- You're approaching a significant vesting event or promotion
- You're planning significant life changes (home purchase, career move)
Your RSU Planning Checklist
To help you bring this all together, here’s your starting point:
- Map Your Vesting Schedule: Create a clear calendar of when all your grants will vest
- Define Your Comfort Zone: Determine the maximum percentage of your wealth you're willing to keep in company stock
- Establish Selling Rules: Create specific triggers that prompt you to diversify, regardless of market conditions
- Schedule Regular Reviews: As you receive new grants and your financial picture evolves, revisit your strategy quarterly
Frequently Asked Questions
When should I sell my RSUs?
There's no one-size-fits-all answer, but I generally recommend considering sale soon after vesting if you're already overexposed to your company's stock or have an immediate need for cash. In my experience, a regular, programmatic selling schedule can typically be more effective than attempts to time the market—removing emotion from the equation altogether.
How are RSUs taxed?
The moment your RSUs vest, they're taxed as ordinary income at your regular tax rate—this is generally unavoidable. The good news? Any additional growth after vesting gets taxed at capital gains rates if you hold the shares long enough (currently for more than one year). For many of our clients, this distinction can create opportunities for strategic tax planning.
Can I use RSUs for a home down payment?
Absolutely! Many of our clients have used RSUs in this way. The key is planning ahead—considering the tax impact, timing your sales strategically, and making sure you're comfortable with how much company stock you'll retain after funding your down payment. Your home and job shouldn't both depend on the same company's success.
How do I reduce RSU concentration risk?
Start with a clear rule about how much company stock you're willing to hold (a range we commonly see is 15-25% of the portfolio for most clients). Then implement a consistent selling strategy, reinvesting proceeds across diversified assets that complement your overall financial picture.
Do I need a financial advisor for RSUs?
If your RSUs represent a significant portion of your compensation or net worth, working with an advisor who specializes in equity compensation can help you avoid costly mistakes and missed opportunities. The right advisor can help optimize tax treatment, manage concentration risk, and integrate your equity into your broader financial goals.
Final Thought
Remember, the purpose of strategic RSU management isn't to miss out on your company's future success—it's to help ensure your financial future isn't entirely dependent on it. When your equity compensation starts feeling like it’s getting overwhelming, it's probably time to seek financial expertise. Your focus should be on excelling in your primary role, not constantly worrying about when to sell your shares.
Disclosures: Advisory services are provided by Titan Global Capital Management USA LLC ("Titan"), an SEC registered investment adviser. Please refer to Titan's Program Brochure for important additional information. Titan’s affiliate, Titan Global Technologies LLC (“TGT”), is an SEC-registered broker-dealer. Both Titan and TGT are subsidiaries of Titan Global Capital Management, Inc.
General client examples are for illustrative purposes only and individual results will vary. Client quotes reflect their personal experience and should not be interpreted as representative of all outcomes. This content is for informational purposes only. It is not to be construed as investment or tax advice, a recommendation to buy or sell any securities, or a recommendation to rollover any retirement account(s). While Titan can provide general tax information and guidance, any information provided should not be taken as tax advice as Titan is not a tax professional. We recommend consulting a qualified tax professional for personalized advice on your specific tax situation. Tax implications and any potential benefits vary by individual circumstances and depend on factors such as income, residence, account types, transactions, and holding periods. Titan assumes no responsibility for the tax consequences to any client of any transaction associated with tax-loss harvesting.
All investing involves risks, including the potential loss of principal. Past performance does not guarantee future results or returns. Diversification is a portfolio allocation strategy that seeks to minimize inherent risks by holding assets that are not entirely correlated. Keep in mind that while diversification may help spread risk, it does not ensure a profit or protect against loss. There is no guarantee that any particular asset allocation or mix of funds will meet your investment objectives or provide you with a given level of income. There is always the potential of losing money when you invest in securities or other financial products. Investors should consider their investment objectives and risks carefully before investing. The information provided does not take into account the specific objectives, financial situation, or particular needs of any specific person. Please visit www.titan.com/legal for important disclosures.