🐧 FIRE and RSU strategies for tech workers | Andre Nader

INSIDE: Andre's Actual Meta RSU Sales, RSU Taxes, Wash Sale Trading, Semi-FIRE Strategies
March 3, 2024

Today, in 10 minutes or less, you’ll learn:

  • 🚀 How Andre managed and sold his vested Meta RSUs (exactly!)
  • 🏦 RSU tax implications you must know as a tech worker
  • 🏖️ A semi-FIRE retiree’s strategies for financial independence, biggest mistakes, and advice

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🔥 FIRE and RSU strategies for tech workers | Andre Nader

Andre Nader writes Financial Independence Retire Early (FIRE) from the perspective of a tech worker who is living through it. He worked over 15 years in tech, with 9.5 years at Facebook on the Product Growth team. After getting laid off from Meta in May of 2023, he realized that he didn’t need to go back to work thanks to his years of high income and diligent savings.

He’s now a semi-retired 36 year old living in San Francisco with his partner and their 5 year old. He spend his time doing things that energizes him, like helping more tech workers reach their “enough” number, spending time with his family, or fishing in the piers around San Francisco.

Tell us about your career journey going from FAANG product growth to helping tech workers achieve financial independence.

My career isn’t at all how I planned. I originally wanted to get into banking, but being in college during the Great Recession meant that wasn’t going to be an option.

I ended up getting really lucky and interning at two tech companies in Austin learning digital marketing. Both companies approached things from a very data-driven way that helped push me into a nice blend of digital marketer and data analytics. I later joined Indeed.com which really accelerated my technical skills, going from Excel, to SQL, to Python.

The other big thing with working on marketing at Indeed was that they let me move my marketing team to physically sit with the product team that was building the products that marketing was driving conversions for. This helped me build a deep understanding of the full end-to-end user funnel.

Bringing that digital marketing, conversion optimization, and data analysis lens into a product team turned out to be exactly what Facebook was doing with their Product Growth team (called Growth Marketing when I joined). It was all about using data, a deep understanding of how users actually use your products, and a creative marketing conversion rate optimization lens to things you could do to improve the product funnel.

While I was at Meta, I also became active in their internal 10k+ employee FIRE community. I created custom compensation dashboards to help me understand my own compensation, since it got complicated due to being tied with the company stock price. I received really positive feedback from my co-workers and realized that if so many of us were having this problem, then tech workers outside of Meta must be struggling with this too.

That is when I started writing FAANG FIRE. I discovered a weird stigma out there that just because you earn a lot of money, you instantly know what you should be doing with it. In addition, our LinkedIn inboxes were flooded with advisors trying to sell us something. I wanted to provide a free resource for my fellow tech workers from someone they can trust and who has walked in the same shoes they are currently walking in.

Writing has also been really helpful for me to understand and articulate my own motivations. I realized that how we approach our personal finances is heavily rooted in how we were raised. I am certainly no exception. I grew up in a household that experienced some extreme fluctuations in wealth. It caused a tremendous amount of instability for me growing up. That experience shaped my approach to personal finances, and understanding this has been key in helping me define my own financial strategy.

After being laid off in May 2023, I decided to explore what FIRE could look like. For now, I am embracing life as a semi-fired, stay-at-home dad to a 5-year-old, and partner to my amazing wife Corin (who is still working in tech). We have spent the last decade in San Francisco while also spending time researching our escape. After all, having enough to retire early in San Francisco is very different from nearly anywhere else.

Given the recent bull run for FAANG companies, tech workers are wondering what to do with their vesting RSUs. How do you approach managing and selling vesting RSUs?

During my 9.5 years at Meta, and after more than 30 different RSU vesting periods, I nearly always sold my shares within a few weeks of vesting.

Do I regret selling all my Meta shares now that Meta is closing in on $500? Nope. I don't regret it. I sold as high as $366, and as low as $80.  I sold because I asked myself after each and every vest whether I would buy more shares of Meta if I was given a cash bonus instead of RSUs.

Never once did I say I would use cash to buy more shares. Because of that—I sold.

I also felt confident selling because I had a plan on what to do with the money after. It also has to do with my goals. I felt like I was on third base, just about to win the game. I didn't need to beat the market to win. All I needed was to be consistent, try to match the market through investing in low fee index funds, and stick to the game plan.

I certainly wouldn’t have minded one more vest though :).

Many tech workers are confused about the US tax implications related to selling vested RSUs. What are the must-know tax implications? How should you plan accordingly?

There is so much confusion here! RSUs are taxed like income the moment they vest. It doesn’t matter if you sell or hold. The vest counts as income in the eyes of the IRS.

When you sell your RSUs for more than their price when they vested, you will then owe additional taxes ON THE GAIN! So if you vested shares at $100, and the stock was $105 when you sold, you would only owe additional taxes on the $5 gain.

The specific tax owed on that $5 depends on how long you held the RSUs before selling. If you held for more than a year you would pay long term capital gains taxes, 15-20% at the federal level depending on your income. If you held less than 1 year, it would get taxed as income.

Important to remind again: you are only taxed on the gain! So if you sell your vest you received for $100 at $100, you have $0 in gains and owe no additional taxes!

If you sell for less, you actually have a loss. Which can be used to offset other gains, or even your income by up to $3,000 per year. If you have more than $3,000 in losses without any gains, those will roll over into future years to offset your income or gains.

For American expats & expats in the US:

International taxation is a complicated beast. If you are a US citizen, Uncle Sam will always want to make sure he gets his cut. Most countries have tax treaties in place where you will get credit for the local taxes you pay. It is one area where it is worth talking with a professional at least the first time you are going through it to understand the nuance.

For anything international, I lean on tax professionals and financial planners who live and breathe those topics. I have had a CFP on my newsletter talk through some of the nuances (more specific to those on Visa in the US) around FIRE Planning while on Visa and International Tax Compliance. That should give a taste of some of the issues you can run into.

Wash sale rules are also confusing. How do wash sales rules work and how do you avoid the downsides of a wash sale?

Due to the crazy bull run recently, fewer people are dealing with wash sales right now.

A wash sale is basically the IRS saying that you can’t sell a stock for a loss and then buy it again within 30 days before or after while still capturing the loss.

Where tech workers often run into this is not realizing their RSU vesting counts as a buying action. So they will sell some older vests for a loss, then within 30 days they will have a new vest event. That new vest event triggers a wash sale. The wash sale will basically take the loss you previously had and add it to the cost basis of your new vest.

So the loss isn’t gone, it is just shifted to when you sell the new vested shares that caused the wash sale.

One way around this is to also sell the new RSU vest that caused the wash sale. This will allow you to capture the full loss!

There is some nuance here, I have a primer on wash sales with a few specific examples.

You’ve written many resources to help FAANG workers to achieve financial independence. Aside from managing RSUs effectively, what are other strategies you’ve used to move faster towards financial independence?

Having a FAANG salary is often approaching FIRE on easy mode. That doesn’t mean it is easy though! The big benefit is that you can out earn a handful of costly mistakes. You don’t get unlimited redo’s though. The biggest trap I see my peers fall into is very quickly inflating their lifestyles as their RSUs increase in value.

Rent a bigger place. Buy an even bigger place.  Brand new furniture to fill the new bigger place. A new Tesla Plaid. Vacations turn extremely lavish and all flights are business class. $400 monthly gym memberships + trainer + peloton at home.

Essentially accumulating really expensive recurring expenses. They end up living paycheck to paycheck even with an extremely high income. It is really hard to downgrade some of these lifestyle choices. Unfortunately, a crashing stock price ends up being a painful forcing function to getting things under control.

I encourage folks to be very cautious of large recurring expenses. To add logging into their life in the form of financial tracking tools (I have a guide of my favorites). Identify fixed spending and discretionary spending.

Then you might end up running into the opposite problem. You have your spending under control, but you don’t have a plan for what to do with your money. You can very easily end up with multiple hundred thousand dollars just sitting in a checking account. It can sound far fetched to someone not in tech, but it can accumulate quickly. Letting it just sit, not earning any interest, not being invested, getting eaten away by inflation makes me cry on the inside.

Come up with a basic plan. It doesn’t have to be complicated! Have 3-6 months in a high yield savings account, if you have specific spending goals that are <3 years away you can keep that in the high yield savings account too, then fully take advantage of all tax advantaged accounts your employer offers.

Most of FAANG offers the ability to contribute up to $69k into their 401k ($23k into your traditional 401k, and the remaining amount filled via company match + after tax contributions aka mega back door ROTH).

There are a few other tax advantaged accounts like HSA, Backdoor Roth IRA, but don’t overlook the value of the good old normal taxable brokerage account. For US tech workers, Vanguard, Schwab, Fidelity all have really awesome low fee index funds and ETFs. The goal shouldn’t be to beat the market, but to match the market.

Keep it simple. Keep it low fee. Don’t try to outsmart the market. I am a fan of the Bogle 3-fund portfolio if you are looking for a good starting point.

What were the biggest mistakes you made on your path to financial independence? What would you have done differently?

I am a very boring index fund loving investor. The reason for that though is that I made some big mistakes early in my life. I was in college during the Great Recession (2007-2009) studying Economics and thought I could outsmart the market. I used student loan money to trade options. I am sure if Reddit and wallstreetbets was around back then I would be an active participant.

I ended up losing $15k in student loan money. That was a huge amount for me and Pushed my net worth even more negative.

That was the highest ROI lesson of my life. It helped me realize that I wasn’t investing. I was gambling. I couldn’t outsmart the market. It ultimately led me down the path of learning about FIRE as I entered the workforce. Not everyone is fortunate enough to learn that lesson while their incomes are near $0. It was early enough in my life that it wasn’t too challenging to overcome.

This did lead to some over correction. I was always fairly frugal, but became even more so after this. It became hard for me to actually spend money. This can be just as big of an issue as spending too much. One book that helped me was Die with Zero. It helped me think about life experience as things that compound over time just like my investments. So I could focus on optimizing my lifetime happiness through more spending on experiences.

What counterintuitive or non-obvious advice would you give to tech workers looking to achieve financial independence?

Don’t make things so damn complicated. Just because you earn a lot of money doesn’t mean you need to come up with exotic ways to deal with it. The basics of FIRE are to save more than you spend. To understand how much you spend. To save enough so that you can live off your investment portfolio in a way where it won’t go to zero.

Avoid the latest get quick rich, save on taxes by doing XYZ real estate, cost segregation blah blah blah.

Sticking to the basics will get you 95% of the way there.

Where can we go to learn more about you?

You can find me on my newsletter FAANG FIRE where I write 2ish times per month as well as follow me on Linkedin where I post too much. All focused on helping more tech workers be able to reach financial independence.

🌐 Beyond your borders

🇸🇬 r/ExpatFIRE: How do expats live abroad when taxes are so high? (link)

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📆 How I can help

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Dexter Zhuang

Dexter is the founder of Money Abroad, a website and newsletter on building wealth for global professionals. Over the last 10 years, he's been a product leader, product manager, consultant and coach at companies like Dropbox, Xendit, and growth-stage startups across the US, Asia Pacific, and Latin America. His work has been featured in global publications like Business Insider, CBS, US News & World Report, and Tech in Asia. He graduated from Dartmouth College.

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