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Restricted Stock Units (RSUs) - Explained! - YouTube
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if you work for a technology company and
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get rsus as part of your compensation
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package then this video
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is for you
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i will be explaining exactly what rsu's
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are
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restricted stock units i will be talking
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about the tax treatment of rsus and
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i will be sharing the strategy that we
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often use for our clients when dealing
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with
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rsu so let's get right down to it what
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exactly are rsus well
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they are a form of equity compensation
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that's really popular
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among technology companies like google
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facebook
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adobe oracle logitech
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they're essentially company stock that
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you get over time and it's going to
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depend
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on the contract that they give you so
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for example if you
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work for google let's say they might
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give you
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an rsu contract where you might be
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awarded 40 google shares
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that will vast over two years so that's
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essentially receiving five google shares
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every three months
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so if the price of google let's say
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increases to
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two thousand dollars per share by the
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time it passed
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so five times two thousand dollars
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you're essentially
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might get ten thousand dollars worth
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of company stock each quarter and that's
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like forty thousand a year
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so that's a considerable sum of money
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what is the tax treatment for rsu's
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rsus are essentially taxable income so
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there's really no way around it you have
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to pay federal
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and state taxes when relevant so you
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just want to make sure you check your
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pay stub to make sure that your employer
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is withholding
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the sufficient amount of federal and
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state taxes
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from these rsus rsu strategy
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so here's the thing if you just sit back
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and do nothing and work for a company
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for a really long time
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you might end up accumulating hundreds
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of thousands of dollars worth
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in company stock so we we have a client
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here at district capital
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where when we met her she had like eight
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hundred thousand dollars
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worth of money all in one stop now you
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might say wow alvin that's really
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amazing
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you've managed to or she has managed to
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accumulate
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that much money over time well it is
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but you also are
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holding that amount of money all in one
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stock and that
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i think in my opinion is super risky
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because
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you'll never know what might happen to a
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company it might be
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great now but what if there's an
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accounting scandal in the future
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or what if it goes bankrupt because of
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the pandemic
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look at general electric or ge it was
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considered a safe stock
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until it wasn't and now it's trading
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at a fourth of its value four years ago
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so one way to lower the risk
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is to sell your rsu shares or
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company stock shares that receive as
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soon
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as it invests and invest them in a
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diversified
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basket of stocks or funds so
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diversification is really
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a key component when thinking about
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investments
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now i know what you're thinking you're
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probably like
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alvin it's gonna be really hard for me
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to get rid of these google shares i've
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only seen them go up over time and i've
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sort of fallen in love with these shares
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but
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ask yourself if you have fifty thousand
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dollars worth of money
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to invest now would you actually place
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it all in just one stock
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so just think about that so that's it my
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friends i hope you learned something
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about rsus they're essentially
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stock compensation and it is taxable so
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you want to make sure your employer is
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withholding the correct
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amount of federal and state taxes and
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just think about risk management
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when dealing with these rsus
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if you do have an rsu your company might
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also
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be offering an espp program or an
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employee stock
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purchase program so you wanna make sure
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you check out
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our videos on espp and whether or not
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you should participate in that
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until next time
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