When Should You Sell Your RSUs to Minimize Regret?
Sell Right Away
The obvious answer that most smart people would say, is to sell your RSUs right when they vest.
I would agree. My strategy is to sell right away. I assume most of us are over-exposed (portfolios and income) to the company we currently work at. Selling right at vest is a way to diversify this risk.
You also don't get any tax preference for holding RSUs past vesting. Once they vest, you are taxed on the value of those shares like it was income paid to you. Therefore, you should only hold beyond vesting if you intended to take cash from you bank and buy the shares outright.
This is the obvious, common-sense answer for MOST folks on when to sell their RSUs.
Automate the Exit
However, if you are a human like me, the day we vest is both super exciting and potentially full of frustration. (Please ignore this next part if you've somehow mastered the psychology of trading).
Doesn't it seem like the day you sell, the stock just goes higher? I know, logically, the market doesn't care about me or when I sell. But it's super frustrating to sometimes play the mental math game of, if only I waited until after lunch or 1:36pm, I could've sold higher! Well no you can't, but it’s easy to forget that.
In order to minimize regret, I sell my RSUs at 10:30am on the day they vest, every time.
When it's automatic like that, I don't think, I just execute. It's not optimal, it's akin to dollar-cost-averaging. Where overtime, the ups and downs should even out and that's fine. The minutiae of intraday price movements don't matter in the big scheme of things.
But the wasted mental energy agonizing over a lost point here or there isn't worth it. Having an automated rule, or if your company allows it, setting a 'sell all at vest' will automate away any decision making you need to do here and minimize any regret.
For most of us the optimal strategy is to sell RSUs right away. And if you struggle with overthinking it, just automate your exit with some arbitrary rule.
This is not financial advice, do what works for your situation.