I heard in a casual conversation that some of my co-workers are holding their RSU shares after the shares are vested. They thought there are some tax advantages in holding the RSU shares.
There is no tax advantage whatsoever in holding the RSUs after they vest.
RSU stands for Restricted Stock Unit. It’s a form of equity-based compensation. The employer gives an employee a number of RSU. The employee can’t do anything with them immediately. That’s the restricted part.
These RSU’s vest in batches over a number of years, typically four years. When the RSU’s vest, the employee receives the employer’s stock. If the employee leaves the employer, all unvested RSU’s are forfeited. That’s another part of the restriction.
RSU is basically a deferred cash bonus calculated and paid in shares. If the employer’s stock does well, the bonus becomes larger. RSU is taxed to the employee as a cash bonus when they are vested.
Any gains after vesting can be taxed as a long-term capital gain if you hold it long enough, but you get the same effect if you buy any stock with your own money.
In addition to mistakenly thinking there are some tax advantages to holding RSU shares after they vest, my co-workers also fall for the endowment effect in behavioral economics. If they get a cash bonus they won’t use it all to buy the stock but if they get shares they don’t sell.
Compare with a regular cash bonus:
Holding the RSU shares after they are vested is the same as the employer giving you a cash bonus and you decide to use the bonus to buy the employer’s stock. It works only if you believe the employer’s stock will do better than the market and all other alternatives.
Besides the issue of being undiversified and having too much tied to your employer, just from a pure investment’s point of view, if you are going to buy a stock with the bonus, you can buy whatever stock you want. Is the employer’s stock really the best in a universe of thousands of stocks? Unlikely.
Therefore, always sell RSU shares as soon as they vest. If you are not contributing the maximum already, increase the contributions to the 401k plan, or fund a traditional IRA or a Roth IRA. Otherwise put the money into a diversified portfolio in a taxable account. Don’t hold the RSU shares.
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Dangerman says
I can think of one scenario where the statement “no tax advantage whatsoever” is incorrect: when the RSUs are placed into the employee’s 401k plan, such as using the RSUs as a form of matching, then the “Net Unrealized Appreciation” rule comes into effect.
Harry Sit says
I’ve heard companies match with employer stock, not with RSUs. Are you sure companies can do that? A 401k plan can have a vesting schedule for the match. When the schedule hits, the match can’t be taken away. The vesting schedule starts when the employee first starts, not when the match is given. For a long tenured employee, everything is vested immediately. I don’t think it’s possible to use RSU as match because you can’t have restrictions, the R in RSU.
Melanie says
I think I know what he meant. We are granted stock each year. Half goes into RSU’s and half is under your control Each year we have the option to take stock award as stock, have it paid out in cash, or deferred to 401k. If it is taken as stock or cash, it is taxed as ordinary income at marginal tax rates. If it is deferred to 401k, it is only taxed FICA and medicare. So there is potentially some tax advantage there, which is probably why you said to increase contribution to a 401k or IRA at the end of the article. However these 401k deferred stock are not RSU’s they are just ordinary stock that you take ownership of immediately.
Wai Yip Tung says
Good point about the endowment effect.
Cash the money and put it in index fund. Clearly you will end up in better position.
It should be clear that the RSU is taxed after vested because employee received a fractional number of share quite a bit smaller that the whole number they are granted.
Andy J says
Tell me one index fund that has beaten AMZN returns over the last 5 years. Broad statements such as “Cash the money and put it in index fund. Clearly you will end up in better position” dont hold value.
Brandon Barkley says
I think the more correct statement would be “Cash the money and put it in index fund. Clearly you will end up in a less risky position.”
What if instead of AMZN, your RSU was in AMC? Your position would be -90% from having taken the money 5 years ago versus +85% on S&P 500. So $10,000 would be $1,000 in AMC or $18,500 in S&P 500.
I am not a financial advisor, but you are taking a lot of risk by holding employer stock. It can pay off great in the end, but you can lose both your job and your stock value at once in a downturn.
I worked for a company that hit a regulatory problem and definitely saw co-workers lose $200,000 when the stock tanked.
steve says
This is very true. It took me several years to recognize it, though. Sell those shares!
AN says
I still don’t get how there is no tax advantage to holding your RSUs after they vest. As you mentioned above, if you hold them longer than a year then you’re taxed at the lower long term capital gains vs the higher short term capital gains. Is that the tax advantage of holding them (at least for a year after vest) which your co-workers were referring to?
I’m guessing you’re referring to something else when you said, “there is no tax advantage whatsoever.” Am I correct in assuming that if you were to sell the same day in which they vest, the cost basis of the RSU = that days market value, so there are essentially no capital gains to tax. Unfortunately, if you happen to hod them until the next day, you’re now obligated to hold them for at least a year (unless you want to pay the short term cap gains). I hope I’m making sense.
Andy says
Presumably the tax gain would be very minimal in 1 day. Hopefully only 1-2%, so minimal tax impact. And if they do ever drop again below the basis price, you can sell them then. If they don’t, what is there to complain about? You have a gain!
Brandon Barkley says
I was pondering this morning about how my RSUs take a couple days to hit my account after they vest. I suppose there could be a narrow case for not selling if some crazy good news came out of your company a day or two after vesting that doubled the stock price so that you’d have a meaningful capital gain.
But how often do doubled stock prices hold for a full 12 months + 1 day? I would just thank my good luck that it happened before I sold in the first place and take the reduced money versus hoping for a long-term gain in a year that may evaporate.
Ryan says
Over the long term stocks increase in value, about 9.9%/year. So unless you think your company sucks or you really need to diversify, I can’t see selling. If I had followed this advice, I would be out about 150k over the last 3 years. I also prefer to pay long term capital gains tax vs short term. If you feel you need to sell your RSU right away because you’re afraid you’re going to lose money, you probably need to find a new employer.
Harry Sit says
@AN – The long term capital gains treatment for holding shares for one year applies to any regular purchases. They are not specific to shares from vested RSUs. Therefore there is no tax advantage whatsoever compared to shares you buy on your own.
If you sell the shares on the same day or a few days after the RSUs vest, there won’t be much capital gains. If you happen to be lucky and the shares appreciated say 10% in a few days, it still doesn’t makes sense to hold the shares for one year waiting for the long term capital gains treatment, because a 2% price drop will wipe out the benefit from the expected lower tax rate. If the stock can gain 10% in a few days, it certainly can lose 2% over a year. I would thank God for my luck and take the short-term gain.
Mike says
While I agree that the long-term holding benefit for RSU is same as any stock from a tax perspective, it is still a relative benefit to hold the RSU for 1 year before selling and diversifying into something else.
It does carry some risk, as you suggested – i.e., if the stock falls considerably in 1 year. Additionally, you may also lose out on dividend income if your company stocks do not have distributions. The employee would have to balance our the risk vs. tax savings of disposing once the RSU position becomes long, especially in higher tax brackets.
I sold about 40% of my RSUs immediately upon vesting. After that, as I started to receive more RSUs each year, I ended up in a higher tax bracket; and now hold the RSUs for one year from vest date and sell them at that point.
Andy says
@Mike: If you can sell the RSU at the basis price, there is no tax implication. You realize the main tax hit when the RSU vests. If you can sell same day (or shortly thereafter) with no price appreciation, there is no tax gain for the lack of diversification by holding for a year. Holding a year only helps you lessen capital gains tax, which if you sell same day should be zero or close to it.
JK says
@TFB what about if the RSU’s were awarded at a price that is less than the market price when they vest? If you held the stock for a year then the (price@vesting – award price) could be a long term gain?
Harry Sit says
The RSUs are taxed as income when they vest. The price at the time when they were granted doesn’t matter. Suppose you got 1,000 RSUs a year ago and the stock price was $10 per share at that time. 250 shares would vest each year over 4 years. When your first 250 shares vest, suppose the price has gone up to $20 per share, great, you will have W-2 income of 250 * 20 = $5,000. The $10 per share price when the RSUs were granted doesn’t enter into the calculation. It’s as if you are getting a $5,000 bonus paid a year later, with more to come down the road. If next year the stock price goes back down to $10/share, your deferred bonus will go down $2,500.
Indu says
Hi so a lay man ques my RSU/stocks r vesting i got 53 units from my employer on vesting , however schawb say ill get 29 unit, im planning to sell it after 1 yr for 15% tax. My questiuon is why do i get on 29 out of 53 where did rest go
Pete says
They must likely went to covering your tax basis. When they vest you have the option to ‘sell to cover,’ which may be the default for you since it sounds like you’re not aware of that possibility. It means that Schwab will sell a percentage of your vested shares to cover the tax basis assuming those shares are your net income for the year, meaning that they likely sold about 20% of your shares, which will probably only cover a portion of your tax bill, so Uncle Sam will hit you again come April 15.
Harry says
Indu – Taxes. When you get a $1,000 bonus, by the time you get the money in your bank account it’s always less. Same deal when they pay you in shares.
D Williams says
What is the tax treatment for an RSU that vests in tax year 1, but there is an additional restriction that prevents the participant from selling or transferring until the next tax year (by mid Feb). In this case, shares are registered at time of vesting (year 1). Is federal income recognized at vest or when the restriction to sell expires?
Harry Sit says
Ask your employer. I believe if you are taxed in the year when there is no risk of forfeiture. If you leave after the day the shares vest, you would be able to sell. That’s income.
Bud says
Interesting. I see many sites asking to dump RSUs as soon as they vest because you wouldn’t buy your company’s stock with a cash bonus. Fair point. However, what if you are with a strong performer and your stocks will grow substantially over a long period of time. I was told by a stock guru that you should hold the RSUs well into the last year of their validity. Conservatively if the stock keeps pace with the broader markets, its likely to make you a good 8-10% return compounded, based on historical performance of the indices. If the stock were to even marginally outperform the markets, then its a windfall. What do you have to lose?
Harry Sit says
You confused RSUs with stock options. Once vested, there is no “last year of their validity.” The vested shares are yours to keep forever or sell and buy something else. If you don’t work for Facebook you can still sell your vested RSUs and buy Facebook if you think Facebook will give you the windfall. Replace Facebook with whatever else you think is most promising. If you are looking for the windfall, the windfall won’t just conveniently happen to come from your own employer’s stock. Better yet, forget about the windfall and just invest in a diversified portfolio.
stephen says
I’ve held on to most of my RSUs and its turned out to be a very very good move, however, the rational investor part of me would never hold such a large % of my portfolio in one stock. I do however have quite a bit of insider information though that guides my actions. Perfectly legal though since I can sell within designated trade windows.
Ben says
IANAL, but if you are in possession of material non-public information, then it is certainly not legal to trade shares, even within your company’s trading window.
Leigh says
Does anybody have any advice on choosing to pay cash to cover the tax bill rather than shares witholding upon vesting of RSUs? I’m in that typical situation discussed above- certain total value granted in RSUs that vests over a 5 year period, 20% a year. I work for a private company that’s very high profile/doing big things right now, and there’s basically no opportunity for options/buying additional stock unless granted as a bonus. I know that there is a high likelihood of the share price going up by at least 10% over the next year because of certain big company milestones coming up (although, like I said, it’s a privately traded company). My first batch of shares is about to vest in a month and I have the opportunity to elect to pay the tax bill in cash rather than have shares withheld to cover it, and I have the cash available. I’m inclined to do this so as to maximize my gains based on our performance this year (definitely wary of the diversification piece of it, but I feel like this is a special opportunity). Is there any reason I should be wary of doing this? Thanks for any advice; I’m pretty new to this!
Harry Sit says
* Sell after vesting = receive your bonus in cash
* Keep the shares = buy your employer’s stock with your cash bonus
* Pay cash for taxes = buy more shares of your employer’s stock (using your cash bonus plus out-of-pocket cash)
Do so only if you really want to bet on your employer’s stock. If you have more shares vesting next year, you will already benefit from the increase in the value of those shares.
Leigh says
*I actually don’t have the option to immediately sell after vesting- I wonder if this is common? If so, maybe something worth referencing in the article. Employees can only sell during specific “purchase offers” that the company holds every so often (I don’t even think it’s 1x/yr). So, I’m basically in the position of, like you said, paying cash for taxes in order to “buy more shares” to hold at least until the next liquidation opportunity, or just taking the reduced (taxed) number of shares. It does come down to betting on the stock (it’s already increased in value by 10% since I started at the company 9 months ago despite a major setback we had this year & we haven’t had a valuation since a huge accomplishment last month, so I have no reason to believe it won’t continue on that trajectory). I’m leaning toward cash for taxes.
Thank you for your insight!
Harry Sit says
It’s common for companies that haven’t had an IPO yet. The shares you get after vesting don’t have a ready market. You can only wait for the purchase offers. Those who work for a publicly traded company can just sell the shares in the open market.
Marbran says
Hi, Leigh.
It’s been almost 3.5 years since you posted on The Finance Buff about your RSU situation. How did it work out? Did you keep the stock in your employer after you vested, and was it a wise financial move?
I’m in a similar position with my employer, a company that is about to go public and has tremendous growth potential. So I’m already thinking ahead for when my RSUs vest. I’m interested in hearing from others, like you, how holding worked out for you. I really don’t buy into the philosophy of selling RSUs immediately when a company has so much growth potential.
Thanks!
Mike Harkins says
We didn’t sell the stocks immediately after vesting and now the stock has dropped from 40 to 30, can that be filed in my taxes this year as a loss?
Harry Sit says
Yes, but only if you actually sell at a price below the price on the vesting date. If you sell now you only claim the loss on your 2018 tax return in 2019.
stacey says
I have a question about wash sale situations and selling vested RSU’s. How can you avoid a wash sale if receiving grants each year during the same timeframe as prior grants are vesting? If selling as soon as possible after vesting and there is a decrease in stock price then do the new grants automatically cause a wash sale? Or, can it be avoided by just not accepting the new grant until more than 30 days after any vested units sold at a loss are sold? Appreciate any guidance as this situation happened to me recently and was quite unexpected as I was unaware of the wash sale rule.
Harry Sit says
I don’t see how accepting a new unvested RSU grant creates any conflict with claiming a loss on selling vested shares. The unvested grant represents a promise of a future bonus conditioned on your continued service and/or performance. You are not buying any shares when you receive a new unvested grant.
Stacey says
That’s what I would think, so I was surprised it showed up on the recent sale of shares. I think I need to speak to the broker and see why it is showing a wash. Thank you for your assistance.
RH says
Old comment but in trying to understand this topic I think I might have answers for future readers that land here. The wash sale in question was probably not related not to the grant of new shares but rather the vesting of that year’s RSUs, especially if they were sold ‘as soon as possible after vesting’. One cannot purchase same stock 30 days before and after sale if claiming capital loss, so 61 days total with sale date in the middle.
(1) Since vest event is like a purchase, if OP sold RSUs within 30 days of vest and tried to claim loss then it would be a wash sale since inside this 61 day window – same as if they purchased shares on open market on vest date, sold at loss within 30 days, and tried to claim loss (not allowed).
(2) Or, OP might have held shares from same company elsewhere, and (A) had Dividend reinvestment enabled (‘DRIP’), or (B) been participating in company employee share purchase program. If they acquired new stock via either of these methods in the 30 days before or after the ‘RSU sale’ again the same rule applies – cannot claim any capital loss if there were purchases +/- 30 days of the ‘loss’ sale.
Solutions to avoid potential wash sales on RSU sale:
– disable DRIP on any shares held already, and stop ESPP participation, for at least 30+ days before RSU vest date. That gives most flexibility on being able to claim a loss if one is incurred by the time RSU are sold. Do not restart DRIP/ESPP until 31+ days after RSU sale date (or, just make sure no new stock will be purchased in any form or account within 31 days after the sale based on declared dividend and ESPP usual purchase timing)
– if one wants to sell RSUs at a loss and claim loss on taxes, be sure that 31+ days have passed from the vest date (since it is your purchase date).
Ideally upon vesting event, put a limit order to sell RSUs at same or higher price as vest (= purchase price) so no loss is involved.
Kate says
Would love anyone’s insight on this: I just got a job with a 37K cash signing bonus, and 26 RSU’s vested over 4 yrs: 5% in yr 1, 15% in yr 2, 40% yr 3, 40% yr 4. My son will be applying for colleges this fall to enter college in fall 2019. Is there any point in negotiating more of the compensation be paid in RSUs vs cash? (I’m thinking not since it’s all taxed at the same rate, or is it?). Separately, would there be a financial aid advantage to maximizing my Roth 401K vs a traditional 401K? I’ve read that in the end it doesn’t matter as although a Roth 401K will lower my Expected Family Contribution (EFC), most schools don’t pay attention to that, and I’ll likely just need more student loans. Any info appreciated, thanks! Kate
J. Gonzalez says
There are 2 types of tax at play.
As indicated above, the income tax on the RSUs may be based on the fair market value of the stock at the time they vest. If the RSUs increase in value from the time the award is made, you will owe income tax based on the higher vesting date value. There is an exception if you make a Section 83(b) tax election within 30 days of the award which allows you to pay income tax based on the value of the RSUs at the time of the award grant. Consult w/your CPA or tax advisor re: 83(b) election at the time of the RSU grant.
The 2nd tax is the capital gains tax which is based on your cost basis and the holding period (i.e. 1yr or less = short term; over 1yr = long term). With the Section 83(b) election, your holding period would start at the time the award is made, and the capital gains tax (long term by the time the shares vest) would be based on the difference between the stock value at the time of sale minus the RSU share value on the date of the award.
For RSU awards for which the 83(b) election was not made, the holding period would begin on the vesting date and your capital gains tax (short term if sold within the 1st year of vesting, as applicable to each lot of shares) would be based on the difference between the stock value at the time of sale minus the RSU share value on the date of that share lot’s vesting. Consult w/your CPA or tax advisor re: capital gains and RSU holding periods.
Harry Sit says
Section 83(b) election only applies to Restricted Stocks not Restricted Stock Units (RSUs). There is a difference.
J. Gonzalez says
Thank you, Harry.
I stand corrected. Section 83(b) election is not applicable to RSUs, only to Restricted Stock. Please disregard my explanation above.
The income tax on RSUs is based on the stock value at the time of vesting, as applicable to each lot.
The vesting date also initiates the holding period for capital gains tax purposes on the subsequent sale of the stock.
Bobby C says
I’m keeping mine because I simply want to have a couple shares (not a concentration risk) of a big company stock and see what happens long -term. It’s an easy way to acquire it. I work a low wage job for a big well known company and I plan to pay the RSU taxes out of pocket (comes to about $10 a week) and keep the stock. Also have 401(k) not in the company at all and other savings and investments. This is a low wage job that offers RSUs not on a partial rolling schedule (you get an award and it all vests at the same time) and most of my co-workers are treating the RSU like they would an income tax refund and are also very confused about taxes – thinking the RSU is BOTH w2 income AND “selling stock” for investment income when they sell all at vest.
Bobby C says
Hmm. Another thought as a followup to my previous question. Maybe I will sell my RSUs and then put that money in my IRA and buy the equivalent stock within that. Am I missing anything here?
Ryan says
If you believe that your company has a good/great outlook then you are definitely losing money by selling the RSUs, you could hold, take the profit AND take long term capital gains.
Harry Sit says
Just believing that your company has a good/great outlook doesn’t cut it. You have to believe it has the best/greatest outlook among all other companies, because if you sell and buy another company’s stock you will also be able to hold, take the profit AND take long term capital gains.
Ryan says
Harry,
I think you’re understating the importance of knowing the industry you’re in and having inside information of your company when compared to the industry (I’m not talking about insider trading, I’m just talking about understanding the product, the product roadmap and how it compares to the industry in the given timeframe). Theoretically you are correct but then you’d also have to know the outlook of “ALL” other companies. Do you? If so, then hat’s off to you, that’s very impressive knowledge. My point is that selling your RSUs is not ‘always’ the best move.
Linda S says
Hello,
I’ve read through all of the questions and answers and could not find my answer. I sell my RSU’s within 1-6 months of the vesting date. For example, I sold my vested stock from Oct 2018 in April 2019 for $68k. My company takes out 25% for taxes by selling a portion at time of vesting. I read that we get taxed again. Can you please let me know how much additional % I should set aside for taxes on the RSUs I cashed out?
Thank you!
Calvin says
Great article. I wish i knew this 20 years ago but it worked out for me. So say I still have vested RSUs and some of them have grown about 800% since they vested. I am expecting a lot of taxes on the gains when I cash out. Should I just cash out immediately a little each year(oldest to new or new to old?) so that my income does not hit the next tax bracket?
Harry Sit says
If you are cashing out, cash out the ones with the highest cost basis first. In general that’s newest to oldest when prices have been rising but there could be dips when a newer batch had a lower price than an older batch.
Brandt Frankie says
If you are bullish on the outlook of your company, pick a price you are comfortable paying for the stock. When nearing the vesting date, if the stock is below this price and you have the cash, choose to pay cash for the taxes. In this scenario you are basically buying more shares.
In another scenario, if you are a long term believer in your company but the price is lower than what you have “paid” in the past you can choose which shares you are holding onto to sell. For instance, if you have 100 shares vesting and 40 of those shares are going to the tax man, you choose to keep the 40 shares from that vesting and sell 40 shares from somewhere else. Preferably at higher cost basis than the current share price. On paper you will show a loss, but in reality you are just selling the same number of shares needed to cover taxes. This loss can cover capital gains from other investments 1:1, up to $3K can be deducted from your ordinary income and anything over that can be carried into the next tax year for the same advantage.
Lastly if the share price is above what you would buy the stock for ordinarily and you have no other shares with a higher cost basis, then sell and transfer the cash to something else or hold onto it until scenario 1 is an option.
Bobby says
Our company was recently purchased and I just received received another RSU grant agreement. There is a strike price listed and I am just now learning about strike price so it’s not completely clear to me. I rolled over all of my equity from the previous venture and there was not a strike price in that paperwork. The company is private and I do not know how many outstanding shares there are, is there any way to estimate the value of the my RSU’s so I can plan for tax implications as they start to vest?
Thanks,
Brandt Frankie says
In the case of a new RSU agreement the strike price is only a point of reference if you are simply covering the taxes at the time of vesting by selling shares. The strike price doesn’t matter, only what the shares are worth when they vest. The price at vesting will establish your cost basis, at every vesting interval. That’s the kicker of RSU’s. If your company grants you $100k worth of company stock that vests over 4 years, it buys those shares at the current value. But since you don’t have access to the RSU’s until they vest any appreciation you get along the vesting schedule is taxed at the time they vest, establishing a cost basis for every vesting period.
If by “rolling over” RSU’s from one company to another you mean you sold all your shares and then bought the equivalent cash value of shares in the new company, then you will be taxed for capital gains or if it was a lot of money you might see the alternative minimum tax. If that’s the case I recommend finding a good CPA.
Lastly, the best you can do for tax planning if you plan to pay cash to cover the taxes at time of vesting is divide the given cost basis of the total grant, by the number vesting opportunities. This will be the rough amount that you will be taxed on quarterly assuming quarterly vesting. Take 40% of that value and adjust as needed when you are close to vesting.
Manuel says
I work for Broadcom (AVGO). Their returns consistently outpace the DJIA. 1000% over the max. I feel very fortunate to work for such a profitable company. I do not sell the stock when it vests. It does expose me to a highly weighted portfolio towards Broadcom, which is not ideal. This is a very good and often correct article. However, I encourage you to do the research to ensure it is true for you.
Fred says
I was awarded 100 RSU’s from Bank of America back in 2015. B of A took out no taxes up front, and left it up to us to deal with the taxes. I was working for an overseas branch at the time, so I had to file my taxes internationally. After discussing it with the other two expats who also were awarded the same. We concluded that the tax complications exceeded the rewards. We all three declined.
Kris says
What happens when your 10 RSUs vest at $5 and you pay taxes on that at 22% but at tax time it turns out that your stocks are now worth $1 per unit and you need to pay 37% in taxes. How do you recover the taxes paid on an asset that significantly depreciated?
Steve says
I’m at exactly that same point. My RSUs have declined in value significantly since issue last year, and I’m waiting to see what my accountant says I owe still. I’ll probably end up having to pay the additional tax for 2021 on the higher value and then claim a credit in a year after filing the 2022 taxes.
Brandt says
You don’t. Best way to mitigate this is to pay taxes quarterly. It’s extra effort/money but could protect you from this since your cpa will be able estimate your tax obligation closer than the 1 size fits all bracket strategy. But yeah tough place to be. Sell at a loss in the same year to offset your gains. Sell at a loss in the next year and hit the reset button.
Harry Sit says
The RSU works the same way as receiving a cash bonus, having some taxes withheld from the cash bonus, and using the remaining cash to buy stocks at $5 per share. The drop in the stock price gives you an unrealized capital loss but it doesn’t lower the taxes you owe on your cash bonus. Outside RSUs, many people buy stocks and then see the stock price drop. You’re in the same camp. If you sell now at $1 you’ll kick yourself if the price goes up to $2, $3, or $5. If you don’t sell, the price may drop further to $0.50 or $0.25. Such is the peril of holding individual stocks.