You might have one of those good problems that you have received quite a lot of restricted stock units (RSUs) from your employer. Why a problem at all? Having a lot of your net worth tied up in a stock of a single company can be pretty risky and if you work for the same company you won’t be able to liquidate the stock when you need it due to insider trading restrictions.

So, it’s a good idea to sell your RSUs to buy some diversified funds or whatever else would be diversified enough and you could sell at will.

But how and when to sell?

There are two main ways, automated trading plans (e.g. autosale as you get the stocks) or manual trades when you can control when you sell and for how much.

When you sell and then plan to buy back new assets, you risk that in the meantime the market moves up and you end up selling low and buying high especially if the whole market moves.

On average the market moves up more often than it moves down. This is even more likely if it recently got down and it will likely rebound.

It can take many days to reinvest money from US brokerage

If you are like me and your RSUs are in a USA brokerage like Morgan Stanley or Charles Shwab, but you will need to pay out the money to a european bank to later transfer it to your brokerage, it might take you a week to liquidate the RSUs and be ready to reinvest the money.

In a week within a market anything can happen, it can go up or down or not change much, but there is a risk. Ideally, you could just swap out your asset the same day…

Eliminate risk of market moving while you wait to rebalance

So here is your trick:

borrow money from your savings to reinvest the same day as you sell RSUs and then use the money from RSUs sale to replenish your savings in a couple days.

Example without using this technique:

  • Monday: sell my RSU
  • Tuesday next week: receive money from the US brokerage - and send it local brokerage
  • Wednesday next week: buy new, more diversified assets

Risk of market moving between trades ~1 week, high

Example with using this technique:

  • Monday: send X from my savings to local brokerage
  • Tuesday: money arrives in local brokerage, sell ~X of RSUs, buy X of diversified assets
  • Tuesday next week: replenish savings from the sale of RSUs

Risk of market moving between trades ~minutes, very low.

Bonus tip: Should you sell your RSUs if their price went down?

If you are going to sell your RSUs and use the money for consumption like vacation or stuff, then selling at a loss is probably a bad idea. However, if you are selling and buying similar assets then it might actually be smart.

Exchanging assets while realizing a loss can be beneficial and is known as tax loss harvesting. This can be an especially good move if the whole market went down, not just your RSUs, as you can lower your current taxes and buy a diversified fund in place of your RSUs.

Combine it with the technique above to eliminate the risk of being out of the market and safely rebalance your portfolio while getting some tax benefits.