I filled my Roth in mid-January *cries in bad timing *
My net worth is down 4K from last month. Set me all the way back to *checks notes * December 31st, 2021.
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Invested assets down 2.4% vs. end of Dec.
Withdrawal rate (ignoring cash in hand) is 3.15%, from 3.14% end of Dec.
We haven’t added much to cash (not shown in graph) this month, choosing instead to fund the shadowy one’s tfsa and move some into my rrsp, which helped in reducing the impact of the January blip.
This is our second highest recorded number.
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I just looked at my dividends and DRIP instead of market value, and felt very lucky. They give me money and buy me shares just for existing! I did nothing for that money!
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So I redid net worth calculations adding in both years increase in home market value, which is volatile at best. Here’s what it looks like.
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Decided to calculate net worth early this month because why not! I’m up about $4k but all but one of my investment accounts lost money (the exception went up). Current net worth is: $252,761.74.
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put in some money to RRSPs, but not sufficient to balance out the general trend. The shadowy one moved more money from our travel fund to investments, but that is in transit, so will only show up later in the week.
Also, the shadowy one is the one who suggested and moved money for the ‘buying on bad news’ approach. Historically they have been much more conservative than me in how we do asset allocation, so this felt unusual. We still have our 2 years of cash on hand, and this would be less than 1% of invested assets. As they said ‘if it goes down, we might get it on sale, if it goes up, we’re happy because everything else goes up, if it gets much worse, this won’t be the thing we’re worried about.’
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I want to talk through my plan, plz tell me if this is sound. My husband now gets shares as bonuses. The vesting period is wacky (I mean IDK if it’s wacky or normal I’ve never gotten shares before) in that a year to the quarter after getting the shares 1/3 vests, then a year after that the next 1/3, then a year after that the next 1/3. Also the bonus amount is awarded in dollar numbers.
ANYWAY.
In terms of net worth, I was going to just simplify things and only count what is fully vested, and just track it the way I track all of our other investment accounts even though it’s only a single company’s stock. I also elected to have dividends be re-invested.
Is this what most people do?
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I like it. In general I tend towards conservative forward-looking estimates, and I really dislike having to enter a negative entry that undoes something from before. Like I stick with my home appraisal from when we bought it, rather than tick that up each year or base it on Zillow/RedFin/etc. And I only update my investment balances for dividends/market movement quarterly. (I enter contributions/deposits immediately, though.) Haven’t really had much to do with vesting lately, but… I did actually track employer contributions in a previous plan where there was vesting, and I wasn’t conservative, and I left that job and had to subtract some unvested stuff, and I didn’t like it!
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That’s good to know, ok so this seems like a reasonable approach. Honestly right now the vested amount is so small (55 shares) it’s basically irrelevant but I want to start tracking now since I have Big Aspirations, haha. Do you think it’s wise to have the dividends automatically reinvest?
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I would normally say “always” but I guess with company shares, there’s some logic to taking dividends and deciding how you want to invest them on your own. Like some say you don’t want too much invested in the same place that employs you; diversify the income streams! If you think it’s a growth company, you could bet on re-investing dividends being a good thing, or you could take them out and throw them in an index fund and let the market do its thing.
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I understand what you’re saying. I think in our case I will just keep reinvesting them for now since:
- The dividends are so tiny anyway.
- I do think the company is a good investment.
- We already have plenty of other investments i.e. all our eggs aren’t in one basket.
Maybe I will reassess when the dividend amount is more significant and/or if the company leadership and scope changes in a major way. I want to avoid too many fees and things too, like if I incur fees or taxes or anything I want the amount to be worth it for what I’m getting. I think our last dividend check would have been like $23 or something, lol, so not yet!
Thank you for the help!
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I used to get this kind of stock vesting in bonuses and also counted it after it vested but never before. I always sold the vested shares as soon as possible (sometimes I had to wait a few weeks/months until after earnings call when I was considered an insider). Even if I believed in the company, I wanted all my investments according to my asset allocation which is index funds and not individual companies.
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For small amounts I think that makes a lot of sense!
If it becomes a larger amount, I would also sell as soon as possible (or potentially after waiting 1 year for capital gains reasons?) in order to diversify, since as neovonretorch noted you’re already heavily “invested” in the company that employs you.
But regardless – yeah, I wouldn’t count them as net worth until it vests.
fwiw I think this is a very normal vesting schedule!
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i usually sell as soon as they vest too … except with my current job our stock is only like $5/share bc we don’t have a product yet 
i do think the stock will go up tho, so im gonna hang on to it for a year and see what happens …
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Thanks everyone! I’m a little surprised to hear selling vested stocks immediately is common, so I’m glad I asked!
Related question: is there a clever legal way to minimize capital gains from selling stocks? Or is that just a thing that is what it is?
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As @iualia mentioned upthread, if you hold the stock for a year or more the gains are considered long term capital gains. Short-term gains are taxed at your ordinary income marginal rate while long-term gains are taxed at the lower (0 or 15% depending on the rest of your income) capital gains rate.
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Ok, thank you for giving me the terms (short term gains vs. long term gains). I will read more about this. I didn’t realize the rate went down so much for just one year of holding!
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Oh! I was also going to mention - a lot of companies will announce that they’re giving you X dollars worth of stock as a bonus, but in actuality the bonus grant is set as Y shares (conversion rate determined this year).
Companies handle it differently, so ymmv, but usually the point is to give you X dollars worth of shares based on current valuation in order to incentivize you to stick around.
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Yes, his company does exactly what you describe! I think I understand that part relatively well because I watched the corporate webinar thing and they went through it. Thank you for mentioning it!
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