LEVATUS Wealth | Top Tips on Financial Planning for Employee Stock Options
Our Financial Advisors
weigh in with their
Top
Strategy Tips for
Employee Stock Options
Senior Wealth Advisors at LEVATUS have years of experience crafting both investment strategies and financial plans that incorporate the benefits and complexities of Employee Stock Options. Here they share their top insights with you.
1. Understand the Terms: Familiarize yourself with all the details of your stock options plan, including the vesting schedule (the period after which you can exercise your options) and the expiration date (the last date you can exercise them) and the strike price (the price you can buy at).
2. Company Performance: Pay attention to the company's performance and outlook. Sound fundamentals and a positive growth trajectory may indicate a positive fundamental trajectory for the company..
3. Diversification: While it's tempting to invest heavily in your own company, avoid putting all your financial eggs in one basket. Diversify your investment portfolio to reduce risk.
4. Tax Implications: Understand the tax implications of exercising and selling your options. In some cases, it might be better to wait for favorable tax treatment.
5. Financial Planning: Consider your overall financial situation and investment goals. Stock options should fit into your broader financial plan.
6. Exercise Timely: If your stock options are nearing expiration, make sure to exercise them before they become worthless if economics of the current market price relative to your strike price make sense.
7. Seek Professional Advice: If you are unsure about any aspect of your stock options or their potential impact on your finances, consult a financial advisor and tax professional.
8. Long-Term Perspective: While stock options can be lucrative, don't obsess over short-term price fluctuations. Focus on the long-term growth potential of the company.
9. Stay Informed: Keep yourself updated about the company's performance, market trends, and changes in the value of your options.
10. Exercise Discretion: Be cautious about discussing your stock options with colleagues or outside parties, as it may violate company and regulatory policies.
Stock options can be a powerful tool for building wealth, but they also come with risks. Being informed, patient, and making well-thought-out decisions will help you make the most of this valuable asset. For a deeper dive on some of the details check out this article.
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ABOUT THE AUTHORs
Susan Dahl and Liz Darling and Jessica Grande are highly regarded client advisors with decades of wealth advisory experience. They write frequently on topics such as investment strategy, risk management, financial planning, and quality of life. Susan is the author of the blog series Female Advisor Perspective, a look into the unique strategy, process and planning insights that emerge when problem solving is viewed through the unique lens of experienced female financial advisors. Their backgrounds have laid the groundwork for an approach that solves for complexity and asks more of wealth.
