How much AAPL stock can I keep?

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KlangFool
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Re: How much AAPL stock can I keep?

Post by KlangFool »

quadog wrote: Wed Jan 12, 2022 12:10 am
KlangFool wrote: Tue Jan 11, 2022 10:42 pm
shess wrote: Tue Jan 11, 2022 10:37 pm
KlangFool wrote: Tue Jan 11, 2022 10:17 pm We are only human being. There will be a point when the amount of money is big enough that we can no longer make rational decision. If this could happen to finance professionals that managed billions as their day job, why do you think that it is not possible for people like us?
I'm not really sure where you're going with this line of argument. We are all humans! Humans make mistakes! Mistakes are possible!
shess,

I do not understand your point. If OP participate in ESPP and OP receives RSU, OP's ownership of AAPL would increase by default. And, it is a slippery slope. The longer that OP hold off in selling the AAPL, the amount of AAPL would grow bigger and it becomes harder to sell.

The inertia is to do nothing. This is how many folks within Telecom companies and Enron ended up too much of their net worth in their employer stock.

KlangFool
Not to pile on, but I don’t get this argument. I mean if you say “My plan says to never hold more than X% in this individual stock” and stick to it, then what’s the problem? I guess if the individual is prone to avarice it could be. But then they’d have problems in other areas of their life anyway.
quadog,

A) OP owns substantial amount of AAPL stocks through RSU.

B) OP decides that he/she want even more exposure to AAPL stock via ESPP and buy 25K worth of AAPL stock every year.

C) OP decides to hold the AAPL stock via ESPP as opposed to selling.

D) OP claimed that he/she would sell the stock from RSU.

Do you believe that OP would stick to the plan of not holding more than X% of AAPL stock?

I wish OP the best of luck!

KlangFool
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craigimass
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Re: How much AAPL stock can I keep?

Post by craigimass »

pnw_guy wrote: Wed Jan 05, 2022 10:11 pm I'm an Apple employee in my early 30s. Here are a couple of other details:
Household income - $400K
Networth - $700K in stock (70/30 US and International Total Stock Market) and $200K home equity

Would love any input or advice.
I am an Apple lover and on and off (I take profits) shareholder since the mid-1980's.

BUT, similar stories as already told. My bro worked for a company you have all dealt with and heard of - after all, I think it was one of the largest companies in the world. It was in communications and internet - how could that go wrong? But it was also grounded in plain old telephones. You must know of which I speak....various companies started with a B or an L or W.E. for the manufacturing end.

Well, bro worked there for 20 years and had 600K in stock due to the plan. This was in 1997 or so. When the stock hit 70 he asked my dad if he should sell - my dad said sell 1/2. My bro sold none.

His 600K turned into 35K. The company reneged on some of their promises for ongoing healthcare, etc.

Some will say "Apple is Different, they care". I'd say this company had a pretty good reputation also, having invented the transistor.

I still hold Apple Stock - including through Buffet and Funds. It's hard to avoid if you own various funds. I'd say I am at about 7% of my portfolio now - which may be in the area of a good compromise.

Give the income stated you should be able to retire with "private jet" money (net jets, not your own!) if you invest a total of 50-70K a year and make normal market returns (10-12%).
KyleAAA
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Re: How much AAPL stock can I keep?

Post by KyleAAA »

Conventional wisdom is you should keep it below 10% of your portfolio. When I worked at Microsoft, I sure wish I'd kept every one of my RSUs and ESPP shares. I did well either way, but ahh what could have been.
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aj76er
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Re: How much AAPL stock can I keep?

Post by aj76er »

You have to balance FOMO (e.g. all your co-workers getting rich holding AAPL) and your own risk aversion.

My own solution:
  • Limit my vested ESPP+RSU to 5% of my portfolio (not including what is already in index funds)
  • Hold ESPP for at least 2yrs for best tax treatment. Thus, only sell qualified lots of ESPP or RSUs if ESPP+RSU > 5%.
  • Upon sale of ESPP+RSU, rebalance into index funds (e.g. VTI+VXUS)
  • For sentimental reasons, I pan to hold my first lot of RSUs forever (~200 shares).
5% is what works for me personally. When my positions grow to 10% I get jittery, and <5% I get anxious about missing out; but 5% feels about right.

Also periodically look at you unvested RSUs to get a sense of just how much of your future capital is dependent on AAPL. This can help with determining a good percentage that you can live with.
"Buy-and-hold, long-term, all-market-index strategies, implemented at rock-bottom cost, are the surest of all routes to the accumulation of wealth" - John C. Bogle
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pnw_guy
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Re: How much AAPL stock can I keep?

Post by pnw_guy »

aj76er wrote: Wed Jan 12, 2022 2:15 pm You have to balance FOMO (e.g. all your co-workers getting rich holding AAPL) and your own risk aversion.

My own solution:
  • Limit my vested ESPP+RSU to 5% of my portfolio (not including what is already in index funds)
  • Hold ESPP for at least 2yrs for best tax treatment. Thus, only sell qualified lots of ESPP or RSUs if ESPP+RSU > 5%.
  • Upon sale of ESPP+RSU, rebalance into index funds (e.g. VTI+VXUS)
  • For sentimental reasons, I pan to hold my first lot of RSUs forever (~200 shares).
5% is what works for me personally. When my positions grow to 10% I get jittery, and <5% I get anxious about missing out; but 5% feels about right.

Also periodically look at you unvested RSUs to get a sense of just how much of your future capital is dependent on AAPL. This can help with determining a good percentage that you can live with.
I really like this approach! I might adopt it!
rookie_investor1
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Re: How much AAPL stock can I keep?

Post by rookie_investor1 »

on a similar topic of holding employee stock in general, what is a good strategy to sell RSU/ESPP ? essentially, if we want to hold say X shares and we accumulate X+Y shares that is above our threshold, which type would you sell first to bring holdings down to X ? at the end, it does not matter which type/grant makes up X that we keep holding, correct ?

1) long term RSU with capital loss
2) long term ESPP with capital loss
3) long term RSU with most capital gains (most gains means huge taxes if stock appreciated a lot)
4) long term ESPP with capital gains (2+ years)
5) short term RSU with capital Loss
6) short term ESPP with capital Loss
7) short term gain RSU
8) short term gain ESPP
shess
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Re: How much AAPL stock can I keep?

Post by shess »

rookie_investor1 wrote: Fri Jan 14, 2022 1:47 pm on a similar topic of holding employee stock in general, what is a good strategy to sell RSU/ESPP ? essentially, if we want to hold say X shares and we accumulate X+Y shares that is above our threshold, which type would you sell first to bring holdings down to X ? at the end, it does not matter which type/grant makes up X that we keep holding, correct ?
I'm treating the above as non-optional: You're getting rid of Y shares regardless, so debating ways to keep the Y shares is out of scope.

My approach is to generally realize any losses available. If I have already booked losses, then I'd realize short-term gains against those losses to let my long-term gains keep rolling (best case of keeping the short-term gains is that they will become long-term gains, so I'd rather just keep my existing long-term gains).

If I was down to various long-term-gains lots, perhaps generated over years, I'd generally prefer to get rid of the ones with the least gains, but I'd probably start to think about long-term issues. Like can I sell for lower gains this year than in some future year? In that case it might make sense to realize gains from a somewhat lower-basis lot than I otherwise might prefer. [Note that this is likely only a problem if you're dealing with pretty large amounts. For MFJ, LTCG is 15% to $250k of AGI, then you add NIIT of 3.8%, and the next breakpoint is 20% rate at $500k of gains.]

Also, I would consider charitable gifting. My donor-advised fund exists almost entirely as a way to remove very-low-basis employer stock from my portfolio. If I sell that stock, it's 99.9% capital gains, but if I gift it to my DAF I avoid those gains and also get a deduction for the value. There is similar reasoning available for gifting shares to family members with low tax rates, or keep some and passing them on with a basis step-up as part of your estate. This mode of thinking would argue for selling high-basis stock and holding your low-basis stock for giving away rather than selling.
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