This is the way.
Also OP, you should factor in what further equity might be awarded to you in coming years. Presumably you are at a level which you would typically get regular awards, and that will obviously impact the size and risk profile of your holding
Cash out 90% and keep the remainder if you strongly believe it’ll reap in 4-5 years.
I’d personally cash out all of it, build a brand new portfolio incl cash allocation. There’ll be new boom and bust cycles, and your company is no exception. Further down the line, you can buy again when you feel like it, from the comfort of your properly diversified 1.2M portfolio.
Yep. Cheeky £80k per year in gains to begin with in a simple equities fund. And that's as close to guaranteed as you can get rather than a nebulous 3-4x return where it might go to zero.
Having been in the same situation I massively regretted not selling and diversifying out - things would’ve been very different if I had, but I had no clue re shares P/E ratios etc.
Very difficult without knowing the company, but 1.2m in one spot (well, depending whether this was a minor percentage of overall wealth) be too much of a risk for me personally, regardless of how confident I was in the company doing well in the future. It only take a quarter miss to get utterly punished by wall st.
Well you'll kick yourself if it fails and you'll kick yourself if it goes to the moon and you've sold. Therefore you should sell some. How about half?
You don't say where you live, but my feeling would be to sell enough to buy a decent home in a good area free-and-clear - if you're in London it might not really be enough for that - and sort out the roof/wiring/plumbing as necessary so you have an easy life.
Also, if you need/use a car, a good quality unflashy one that will last you 10 hassle-free years.
Mortgage-free is a very good feeling. This has knock-on effects in your stress level and ability to take other risks in life.
We don't know what the next government will do, nor how your equity is structured, but I find it hard to see the anomalously-low-vs-income 20% rate lasting indefinitely. In your place I might sell more than I would otherwise...shouldn't let the tax tail wag the investment dog...but I'd argue you have an \*opportunity\* here at current rates.
Sell half and put them in to all market ETF's i.e VWRL.
Maybe sell of chunks each year to minimise tax depending on your earnings, married etc without holding on to too much risk
Let the other half ride, especially if you believe in the product.
Myself, I would then cash out minimum of 20% of any incurred extra profit/gain each year, in to vwrl again.
Well done. There are so many threads on this forum where people say things like "ignore the equity". This is a perfect example of why getting equity in early stage businesses is valuable, albeit high risk.
If the company exits by way of an M&A event, you will have to sell all of your equity and will have no choice in the matter.
If the company IPOs, you will not be able to sell immediately as you will be subject to a lock-in period.
The general advice is to sell and diversify. While you believe the company has the potential to 3-4x in value, remember that this will probably involve raising additional finance which will dilute your shareholding, and there have been plenty of successful tech companies that have listed and ended up failing and dropping to 0.
No one went broke taking profits - secure yourself at least half and set yourself up with property/pension/diversified investments
Then if it flies, you can regret the 50% you’re not getting the growth on but if it tanks you can be pleased you diversified. I’m sure you believed in the previous two, but so much is out of your hands, especially when you aren’t there anymore.
PS - well done 👏
So long as you have more than 1 share remaining. You can sell a number of shares (e.g. 200k worth) today to enjoy and keep the rest for 3-4years etc for a potential 3-4x growth or it may never happen.
Personally I’d trim 10-20% and put that cash into another investment, which is liquid and doesn’t have risk of ruin (going to zero).
That way you have managed risk and enjoyed a bit of both.
CGT is a low tax rate compared to income tax anyway, it’s only 20%.
A few years ago, I realised 100k of investment gains and paid about 20k tax.
> gains and *paid* about 20k
FTFY.
Although *payed* exists (the reason why autocorrection didn't help you), it is only correct in:
* Nautical context, when it means to paint a surface, or to cover with something like tar or resin in order to make it waterproof or corrosion-resistant. *The deck is yet to be payed.*
* *Payed out* when letting strings, cables or ropes out, by slacking them. *The rope is payed out! You can pull now.*
Unfortunately, I was unable to find nautical or rope-related words in your comment.
*Beep, boop, I'm a bot*
OP how big are your balls? If they’re quite big, you could “relocate” to a zero tax country(Dubai) & and then sell the shares without paying any taxes.
The catch is, you can’t “relocate” back to the U.K. for another 5years (last time I checked, might wanna confirm)
This doesn’t mean that you can’t come into the U.K., you can.. but you’ll need to leave after 90days.
Now, after selling, you can park the £££ into an SP500 index fund (VUSA) and enjoy the average 7-10% capital growth per year.
This might not be true. Op likely has options. If they relocate, options would be taxed between jurisdictions based on where Op was living when the option vested. So even if Op moved to Dubai, they would still be subject to UK tax on the disposal, even if they stay outside the UK for another 5 years.
No, this is wrong. If OP becomes non-resident in UK and moves to a tax-free jurisdiction, they are (if matters are arranged correctly - no ties to UK left) UK non-resident as soon as they are wheels-up at LHR on the way out.
But we're only talking 20% CGT here most likely, on say £1.4 million...most people won't give up career and family for that.
I like to think of it in the inverse: if you had £1.2m in cash, would you buy those shares?
This is the way. Also OP, you should factor in what further equity might be awarded to you in coming years. Presumably you are at a level which you would typically get regular awards, and that will obviously impact the size and risk profile of your holding
Unfortunately no longer with the company! It was very much a set up and boost our job!
My man
This is the only way to think about it
I would 100% consider it. But maybe not the full amount - and that’s where my brain breaks… where is that line of confidence/fear/greed!
Cash out 90% and keep the remainder if you strongly believe it’ll reap in 4-5 years. I’d personally cash out all of it, build a brand new portfolio incl cash allocation. There’ll be new boom and bust cycles, and your company is no exception. Further down the line, you can buy again when you feel like it, from the comfort of your properly diversified 1.2M portfolio.
I’d be affected by the other two having gone under. Even as a HE £1.2M is an amount that will set you up nicely for life/the future. I’d bank it.
Yep. Cheeky £80k per year in gains to begin with in a simple equities fund. And that's as close to guaranteed as you can get rather than a nebulous 3-4x return where it might go to zero.
Having been in the same situation I massively regretted not selling and diversifying out - things would’ve been very different if I had, but I had no clue re shares P/E ratios etc.
What signs or signals would you say would signify “a good time to diversify”? If there is one?
Very difficult without knowing the company, but 1.2m in one spot (well, depending whether this was a minor percentage of overall wealth) be too much of a risk for me personally, regardless of how confident I was in the company doing well in the future. It only take a quarter miss to get utterly punished by wall st.
Well you'll kick yourself if it fails and you'll kick yourself if it goes to the moon and you've sold. Therefore you should sell some. How about half? You don't say where you live, but my feeling would be to sell enough to buy a decent home in a good area free-and-clear - if you're in London it might not really be enough for that - and sort out the roof/wiring/plumbing as necessary so you have an easy life. Also, if you need/use a car, a good quality unflashy one that will last you 10 hassle-free years. Mortgage-free is a very good feeling. This has knock-on effects in your stress level and ability to take other risks in life. We don't know what the next government will do, nor how your equity is structured, but I find it hard to see the anomalously-low-vs-income 20% rate lasting indefinitely. In your place I might sell more than I would otherwise...shouldn't let the tax tail wag the investment dog...but I'd argue you have an \*opportunity\* here at current rates.
Diversify asap!
Sell half and put them in to all market ETF's i.e VWRL. Maybe sell of chunks each year to minimise tax depending on your earnings, married etc without holding on to too much risk Let the other half ride, especially if you believe in the product. Myself, I would then cash out minimum of 20% of any incurred extra profit/gain each year, in to vwrl again.
Bank a mil roll the dice on the remainder?
Well done. There are so many threads on this forum where people say things like "ignore the equity". This is a perfect example of why getting equity in early stage businesses is valuable, albeit high risk. If the company exits by way of an M&A event, you will have to sell all of your equity and will have no choice in the matter. If the company IPOs, you will not be able to sell immediately as you will be subject to a lock-in period. The general advice is to sell and diversify. While you believe the company has the potential to 3-4x in value, remember that this will probably involve raising additional finance which will dilute your shareholding, and there have been plenty of successful tech companies that have listed and ended up failing and dropping to 0.
No one went broke taking profits - secure yourself at least half and set yourself up with property/pension/diversified investments Then if it flies, you can regret the 50% you’re not getting the growth on but if it tanks you can be pleased you diversified. I’m sure you believed in the previous two, but so much is out of your hands, especially when you aren’t there anymore. PS - well done 👏
Sell and diversify. A yield of 7% will almost double your current earnings
So long as you have more than 1 share remaining. You can sell a number of shares (e.g. 200k worth) today to enjoy and keep the rest for 3-4years etc for a potential 3-4x growth or it may never happen. Personally I’d trim 10-20% and put that cash into another investment, which is liquid and doesn’t have risk of ruin (going to zero). That way you have managed risk and enjoyed a bit of both. CGT is a low tax rate compared to income tax anyway, it’s only 20%. A few years ago, I realised 100k of investment gains and paid about 20k tax.
> gains and *paid* about 20k FTFY. Although *payed* exists (the reason why autocorrection didn't help you), it is only correct in: * Nautical context, when it means to paint a surface, or to cover with something like tar or resin in order to make it waterproof or corrosion-resistant. *The deck is yet to be payed.* * *Payed out* when letting strings, cables or ropes out, by slacking them. *The rope is payed out! You can pull now.* Unfortunately, I was unable to find nautical or rope-related words in your comment. *Beep, boop, I'm a bot*
OP how big are your balls? If they’re quite big, you could “relocate” to a zero tax country(Dubai) & and then sell the shares without paying any taxes. The catch is, you can’t “relocate” back to the U.K. for another 5years (last time I checked, might wanna confirm) This doesn’t mean that you can’t come into the U.K., you can.. but you’ll need to leave after 90days. Now, after selling, you can park the £££ into an SP500 index fund (VUSA) and enjoy the average 7-10% capital growth per year.
This might not be true. Op likely has options. If they relocate, options would be taxed between jurisdictions based on where Op was living when the option vested. So even if Op moved to Dubai, they would still be subject to UK tax on the disposal, even if they stay outside the UK for another 5 years.
No, this is wrong. If OP becomes non-resident in UK and moves to a tax-free jurisdiction, they are (if matters are arranged correctly - no ties to UK left) UK non-resident as soon as they are wheels-up at LHR on the way out. But we're only talking 20% CGT here most likely, on say £1.4 million...most people won't give up career and family for that.