Additional earnings reports from major tech companies, driven by Nvidia, coupled with trader FOMO, could fuel a resurgence in market buying pressure. I'm considering investing over $300k, but I'm uncertain about risk mitigation strategies.

It is crazy how complicated some of this gets! Thanks for the great video

Friend of mine's boss/founder described the stock options he was offering as "I can promise you enough stock options to wallpaper your house with. I can't promise that won't be the best use for them."

Don't forget that in the Diversification section, you might simultaneously lose your job and have your stocks/options plummet when the company or *sector* is in trouble. You're already functionally diversified in the sector of your career, so if you do take the stock options, you have to heavily invest in other sectors to even the risk out.

I think another important thing to consider when discussing equity with a future employer is to ask if they have a “clawback provision“. A lot of people assume that if they purchase or receive equity from their employer that they will be able to still hold onto it even if they leave the company. That’s exactly what the clawback provision stops people from doing and a lot of employers don’t tell their employees about this until after they’ve accepted an offer. It’s pretty deceptive imo.

Stock options are phenomenal at companies that are actually making money. Most startups, especially the ones burning cash, either are worthless or are diluted so much that they end up being worthless. Never take a lower salary (cash) for more stock.

I sell off company RSUs and ESPP shares as soon as they vest and channel that money into diversified index funds. Holding large amounts of money in an individual company's stock is very risky. Additionally, the time during which a company's stock price goes down is also a time when layoffs may be more likely, increasing the risk further.

Although the companies in my portfolio are solid, last year was a loss. In my first year of investing, I experienced a 35% decline in the March/April sell-off and a further 17% decline in the most recent sell-off. I earn my money via hard work, thus investing makes me anxious and depressed. I'm uncertain if I should sell everything and wait.

Stock options are absolutely worth it, for those already making 6-7 figure salaries. If you make $40K a year, you'll never be able to buy enough to make a significant difference unless you get employed early in the company's history, and you get lucky enough for their stock price to explode.

This is the first Two Cents video that gets me really confused because of how complicated the topic is. Kudos to you guys for helping to improve financial literacy for everyone.

very informative as always! You guys rock!

My brothers girlfriend is working at amazon she got every year instead of money as a bonus Amazon shares as a christmas gift. And over the years it went up to 100 000€. It can be a really good but depends on which company you are. Amazon's stocks went up a lot during pandemic.

As simple as the explanation was made, this video would need to be watched several times to better understand stock options. My head spinning

I was given craptocurrency as equity for a prior job. I had to hire a tax lawyer just to fight the irs because the company reported it incorrectly, then declared bankruptcy - long story short, Crypto sucks.

As someone working at a startup…this is the only way 90% of companies compensate with “equity” (which it is not)

This is a fantastic video, thank you! It really makes all this stuff easy to understand. I just had my 25th anniversary at the company I work for and it's privately held so I don't know anything about this stuff.

Excellent intro to a varied and deep topic, thank you! BTW, LOVE the IRS Eagle logo character! Something about it is both mighty AND terrifying!

Thank you for the simplified explanation

Most offer RSU's it's not as tax favorable for an employee 😥

Depends, Microsoft stock option, hell yes! Carvana stock options, probably notlol

I think of these things as nice bonuses, but I only rely on my main shovel (base salary) to fund my life and retirement. Anything else is just icing.

Making my head spin, thank you for exploring this topic!

Thank you for this awesome video! So many startup employees are so young and this stuff is so complicated. Is there a difference between exercising and executing? I exercised a lot of shares this year, does this mean I’ll likely have to pay an alternative minimum tax?

Thank you for this vid. I needed this

I think as with most employee benefits, it gets better the longer you stay. I worked only two places and the first place I worked was a difficult decision in part because they did a 401k match with partial vestment. Due to me leaving when I did, I did not get the full match, which cost me quite a bit of money. In the end I believe it was okay because I'm much happier at my other job. I don't like the handcuffs metaphor as you are free to go any time you would like. It is weighing the costs and benefits of staying and reaping the rewards of doing so, or leaving for possibly greener pastures.

Another confusing thing is when a company offers you shares but they're a different category of shares. I've heard them called "B" shares. I can't say I understand the first thing about them.

Thanks

Please do a full video on AMT!

My company has an ESPP and I max that out but I just ignore it. That will be my play money someday and I hope that the stock does great but I also do my 15% in my 401(k).

@Julia and Philip: why don't you turn on the "Thanks" option on KZfaq? Not everyone is using Patreon. Thanks for the content.

7:59 Money is a renewable resource, time is not. So true!

Very informative and easy to follow 👍 👌

Very accurate in your analysis. I was fortunate to make lots of money in stock options and ESPP. The company was well established and not a startup, but at the time was still in a growth industry. I eventually cashed out and bought dividend paying stocks and I'm now living on those. I'm retired. Investing is a marathon, not a sprint.

WallStreetBets would like to input their opinion.

Why on Earth are you guys removing this ?? @4:00 That's not an example of progressive taxation. That's an example of marginal taxation. Marginal taxation staggers the tax rate. This staggering could be either progressive (rising) or regressive (falling), there is no requirement to be progressive. Progressive taxation just increases the tax rate for blocks of income, that is, the more you make the more you're taxed. Marginal taxation is not a requirement here.. You can have a progressive taxation system that doesn't implement marginal taxation. It would tax the full amount of your income at the higher tax rate.

Would you guys ever consider an episode on wage theft? aka when workers productivity is increased but wages actually decrease when adjusted for inflation. How do the millions of working class people who fall prey to this from corporations avoid such traps, I'd love to know your 2 cents! 😄

Please do more vedios. We love your channel.❤️

Excellent! So glad I left the golden handcuffs! My mental health is better and my finances are diversified so I can keep my wealth!

At the 5 minute mark, you say that the $90 bargain element is taxed as ordinary income. That's not necessarily true. If you hold, you'll certainly need an AMT adjustment, but it is possible you may not pay any tax on that purchase since it is an ISO (and only pay tax when you sell).

I like how these guys have gradually shifted from Brady Bunch to Punk over the years I've watched them.

Please update your "all videos" playlist! KZfaq took away its "play all" button on channel pages.

great video!

yes

money is renewable, time isn't -- thank you for that

By "options", I thought this was going to be about calls and puts, but yeah, this is probably the far more relevant "options" topic for the Two Cents viewership.

With the right approach stock options are probably one of the best trading instruments. Although the topic is not quite simple, when a trader obtains the right knowledge and skills everything becomes clearer than morning air) I wish everyone good deals!

As an active trader it’s funny I always forget these type of options exist lol. To me options are calls and puts to be bought and sold by average traders.

The explanation of ISO tax treatment is not correct. You must hold the shares 2 years from of grant and one year from purchase/exercise to receive the most favorable tax treatment, not one year from sale.

Stock options instead of cash as payment is a lot like being paid with lottery tickets instead. Most companies that have to offer it do it because they are unable to offer higher salary and it sure is a risky bet. The really gross thing is vested options that try to make it not desirable for you to leave because your holding your hopes to some stock option…

Equity compensation - To sell employers own company before investors find out that the palace is a house of cards.

Subbed!

Dr Strange and the Alternative Tax Universe.

Options are certainly worth it. I personally only trade 0dte spy options.

I would never take a stock option. I want cash. I don't give a shit if a company's stock goes from $33 to $34 a share. Me working 10% harder or 100% harder probably had a negligible impact on whether the stock is going to go up or down. If you're not joining a company at the beginning of its life, it's too late for any stock explosion to build any meaningful wealth. My landlord doesn't give a shit if I have stock in where I work for; my landlord wants cold hard cash. If companies want employees to quit/leave less so they don't lose money from having to constantly fill positions, maybe just pay everything a fair fucking wage so they don't feel the need to look elsewhere to get any sort of pay raise. TL;DR, stock options are a sham made up by the companies to fuck you over yet again and keep their profits rising to give executives giant bonuses left and right.

Well i wish I could have a portion of my salary paid in stocks. But then I'll probably have to stay with my employer and i don't stay in a position longer than two years.

when I was young I thought physics is the hardest subject to understand , but now 🤐

I thought you were going to talk about options such as selling calls and puts. I was going to say Hell Yeah, I've been doing that in 2022 and made more than $7,000 in side income

This is definitely the most complex video you've made yet hahaha

Not me watching this as if it pertains to me with my minimum wage 😂

So..............usually no 😅

please do a video on margin investing.

Doesn't a stock option also give you the right to sell a stock at a certain price?

So I’m looking at a job that has informed me a portion of my income will be in some form of stock option should I be hired. 90k salary with 20k in stocks. After state and federal income that would leave me with ~65k salary. Is this a good deal or not? It would be my first real job and I’m trying to decide. Thanks.

"Money is a renewable resource, time is not."

guy looks like ryan gosling

When you need an accountant to understand stocks its not a good investment in my view. You got everything to loose, whereas the companies who get the cash have nothing to loose. Id rather invest in a cdr at my bank. At least my money is guaranteed that way.

Bring back the 'stache!

Another video! Woo hoo!

Update

It's not the same without the mustache.

ILLEGAL! You're employing a 4yr old! BAD! lol

BRING BACK THE MUSTACHE.

American tax are a mess

#bringbackthemustache

I have challenged myself to put away 50% of my monthly income into stock options which is quite easy since I live frugal without debt. I work as an account executive, and make over $20000. $10000 goes into dividends, and the other $10000 covers my my food plus living expenses. I am seeing improvements in my portfolio, dividends look certain, but I have to attribute this to only to guidance of a licensed fund manager who allocates funds to a plethora of assets. I have to stay disciplined, and remember that I’m in it for the long term. Good luck to everyone and thanks for the great video.

vest my chunks

Most beginners believe that investing in cryptocurrencies and stocks is about holding it up, with the recent market crash and recession. We must know that long-term price predictions are very difficult to achieve. It is better to trade short term and make a profit

Child labor love

Ya. Nope. I would rather take the money in my paycheck. Stock markets are no better than the slot machines in Vegas.

Kinda sad since almost none of the viewers here will ever get paid enough to benefit from stock option

Employee Stock Purchase Plans are especially risky when it comes to diversification. You might be surprised how much of your entire portfolio you end up investing in a single company when it's deducted in small amounts monthly pre-tax. Even within the IRS limits.

0:33 what's up with that accent? effecctivvve

why did they get tattoos? no 2 cents between them.

Thanks for a great video with great information without a strong political lean…..very refreshing from you guys these days :)

"money is a renewable resource, but time is not" yeah, you need money to enjoy free time & you have to spend time to get money (usually/mostly)

You shave your mustache and grew your hair 😂🤣

I want to invest roughly $700,000 in stocks since I've heard that even in challenging times, investors may turn a profit. Any excellent ideas for stocks?.

It's not THAT complicated, once you just LEARN the math. If you have ANY of these things offered to you, you are probably working for a great company and/or are a hot commodity - if that's the case you probably have the aptitude to learn the math. Don't keep more than 5-10% in one stock (including your own company), but definitely hold until it makes sense from a tax standpoint. Usually after a few years, you can just churn through the ESPP, stock options, etc. when it makes sense and purchase other stock, ETFs etc. for diversification once you get going. Usually that 15% discount for ESPP will outweigh the stock performance in the long term, unless you're working for an ever-downward trending company, just sell at the end of the discount period each time.

Lots of scam bots in these comments.

Are these the same two that started this channels 3 or 4 yrs ago?

I love y’all, but I liked it when you looked like my parents. Now with exposed tattoos and modern clothing…just can’t do it.

Fresh Tattoos?

I see, so a stock market crash is imminent.

No, it’s a certified way to blow up your account.

Is capitalism evil and is a post growth economy possible are video ideas

Why do beautiful people get tattoos?

Child labour!

What happened to yerman’s tashe?? Unsubscribed!

These are First World Problems. If you get promoted to a position/company that offers stock options, then you have the money to pay a professional financial advisor (and not get free advice on KZfaq).

Dear PBS associates and presenters: Please stop with all the artificial hand gestures. I find your videos almost unwatchable because of them. They are unnatural and off putting, and they are common to all channels bearing the PBS logo.