Great advice from Dave. I would do exactly the same, I'd only leave 10% of my net worth in that stock. And I would move the money sold from the stocks into a mutual fund.
I'd pull out enough to get the original value back along with some profit and keep it in a bank account until you can find a use for it. So long as the value stays elevated, I'd slowly sell out of it to raise the floor on what you get back in case it fails.
Some stock options have expirations, as well. To be that far into the money probably means he has some old options in the plan. Its probably time to execute those older options, even though they will trigger capital gains tax.
These are equity award options and anything above the strike price will be ordinary income. It’s not automatically taxed at 30% but rather your income bracket. Generally your effective rate will be no higher than 25-28% on ordinary income on a $1million income.
Agree! They should move the money, pay the tax. Given that it would be 30% loss but they can sleep better at night without the fear that this single stock might drop significantly.
@@macho2820 right. They don’t have to move it all as it sounds like that company is a good stock. This is why I said they should follow Dave’s advice of leaving 160k in the current stock and moving everything else and pay the fee.
Dave missed the most important part, which is the lesson from Enron. If the company goes bust overnight for any reason at all, you’ve lost your investment and your job! Keep that 10% Dave talked about, but invest the rest in a good index or mutual fund, and have a professional do the transaction so you don’t make a mistake and create tax problems.
dave is legit brilliant, and he has a legit brilliant strategy, the baby steps. but he's not right about everything. But I do like how he reversed the logic to avoid the sunk cost thinking trap.
10x gain is a high beta stock. Regardless of it’s perceived trajectory sell 50% now and another 50% next year. Get professional advice for the remaining $250k.
It’s a private company, so you wouldn’t be able to buy it. She said it “just got valued at” meaning it was a private funding round. If she said it “is valued at” it would be a public company.
Their tax rate won’t be affected by the capital gain. Assuming they make less than the 500+K threshold amount in earned income it will be 15% of the net profit on the stock.
This is NOT a question about how much to allocate between stocks and other assets. It’s a question about how much to hold in a single stock. Do better, captioners!
Company Stock options are not stock. It's an option to buy for 10 years hoping that the stock will grow as an incentive to stay with the company. The question is how much does it cost to buy the stock option. So if you buy it, it is not taxed, it is only taxed when you sell it. This is not about having a million dollars in the stock, it is only the purchase cost. What he might want to do is "tender" the stock to buy more shares. So, for example, you buy 100 shares, wait a year+1day and tender that 100 share block to buy more of the option shares. By tendering, your only cost is the original purchase price of the original 100 share block, not the tendered share price. But this gives you the growth but not the taxes. Selling creates taxes, and we don't like taxes. "Never pay taxes if you don't have to." The hold time is forever.(Warren Buffet)
The advice for people in situations like this should always be “talk to somebody who knows what they’re talking about.” This situation is likely more complex than the caller explained or understands.
@@joejohn. Yes she did mention that they were options, about a million in value. Never said the purchase prices, but I assume if it is company stock, that it is ISOs instead of RSUs.
There is nothing wrong with stock picking. The average person should just not be using most of their worth to do so. And they should be doing it for a reason.
how can you say that without knowing the sector and industry... seemed to well , by paying the "hefty" tax you can set yourself back a decade in cap gains. Let's say its tech and not Healthcare , if tech, then exercise as they mature. Never pull out and lose half up front. Will take you a decade to get back to that base level.
Have seen companies go from great then the owner dies and the kids don’t want to run it so they turn it over to a corporate structure just look at Pamida the company was customer focused and then they were cutting jobs cutting truck shipments and things went down hill
You can cherry-pick anything. I’m not advocating having everything invested in one company, but your argument could easily be countered with: “Look at everyone who went all in on Apple in 2000!”
@@markhazzard9730 you’re obviously missing the point. I was using it as an example to show why his argument was poor because I could just as easily use it against him.
@@markhazzard9730 also, why do you keep misusing quotes. Enron *was* a real company at one time. Putting it in quotes implies it wasn’t. Same with cherry-picking. That’s a real term people use, not made up.
Ramsey's advice here is ok, but it really depends on need as well. It seems that they don't need the money, so logically you would not anchor based on a % but what are you going to do with the money
Building a good investment portfolio is more complex so I would recommend you seek Ted support. This way you can get strategies designed to address your unique long/short-term and financial dreams
Yeah that's right I think the best way is to invest with a professional, at least it saves the trauma of too much losses, This just surprised me because I also invest with Ted
I was advised to diversify my portfolio among several assets such as stocks and bonds since this can protect my portfolio for retirement. I'm seeking to invest $200K across markets but don't know where to start.
With the help of an investing advisor, I diversified my $400K portfolio across markets, and I was able to earn over $900k in net profit from high dividend yielding equities, ETFs, and bonds.
My consultant is Nicole Desiree Simon She has since provide entry and exit points on the securities I focus on. You can look her up online if you care for supervision.
Thanks for sharing, I just looked her up on the web and I would say she really has an impressive background in investing. I will write her an e-mail shortly scheduling a call.
I concur that this is scary and the caller should sell the position down and then go all-in on Tesla stock with the proceeds. At these low prices they are practically giving away Tesla shares.
Umm, no. Anything associated with Elon Musk is a house of cards. Anyone telling you to go all-in on a specific company probably is trying to pump their positions in it.
@@scarpfish Exactly. NEVER invest all of your money in single stocks. You can invest small amounts if you want to play, but don't invest more than you can afford to lose. Mutual funds are the best vehicle for long-term investing.
A $ 30,000 investment in a year now $691. I would need a 5000% return to break even saving money is hard to lose it all so fast I wouldn't invest in individual stocks again.401k I still have my income to build a new cd type retirement
No one is commenting on the massive elephant in the room! Neither Dr or the caller has mentioned anything about doing due diligence on the company. If you don't research the company, you are gambling!! The caller would not have even phoned in if they had confidence in the company. Poor form DR tut tut..
I think Dave intimated that but saying that you had to consider only the prospects going forward, but good point that it was not as clear as it could have been.
Stock options do not equal stocks. They merely have the right to purchase the stock at a discounted value. If the company doesn’t go public, the options are valueless.
He's so whack lol. Doesn't ask what industry or sector... And they didn't "bet the farm" it's how RSU and options work if your employed by the company....
It is betting the farm. If they didn’t sell and the price dropped they would be out of a lot of money. Say the options expire when the price is dropped then what? It’s life changing money 💰. If you don’t like his content I suggest you go watch something you actually like rather than being negative so early in the money lol
@@MS-ey3lb Dave is great for people with spending problems. He's not great for people who are trying to build/create wealth and already know how to manage their money. So many remarks on this particular caller were off base. The kid saying, we don't like to go to the casino to lose money. Casinos dont have IRR and EBITDA and GP margins and product demand, innovation a C-Suite... they didnt even ask the sector. Also when options are exercisable.
No, but one thing they could do is take a portion of these shares and transfer them to a donor advised fund. Then they can use that donation to offset some of the taxes on the sale. This would only make sense though if they are already charitably minded, and it is still limited to 30% of their AGI (50% if it's short term capital gains).
That’s a charitable remainder trust. It’s potentially possible that you could do that, but I believe you’re only going to get paid from the whole life insurance you buy within the trust. (I think)
Just buy a rental with cash! Sell everything that isn't in my billing program! Pay me for a book on how to invest! YOU DON'T NEED PASSIVE INCOME! Just own rentals!
@@charlesguzman9798 oh wow you got me. Go hover over you notification bar so you can get first comment on 80 other videos making you feel like you accomplished something
Great advice from Dave. I would do exactly the same, I'd only leave 10% of my net worth in that stock. And I would move the money sold from the stocks into a mutual fund.
"thats what they said about Bitcoin" and here we are today...
exsactly haha
I'd pull out enough to get the original value back along with some profit and keep it in a bank account until you can find a use for it. So long as the value stays elevated, I'd slowly sell out of it to raise the floor on what you get back in case it fails.
Some stock options have expirations, as well. To be that far into the money probably means he has some old options in the plan. Its probably time to execute those older options, even though they will trigger capital gains tax.
6:00 that was such a great question. Somehow it didn't pop into my head
Being that they would be taxed 30%, they don’t really have a million if they move it. With that said, I would follow Dave’s advice!
These are equity award options and anything above the strike price will be ordinary income. It’s not automatically taxed at 30% but rather your income bracket. Generally your effective rate will be no higher than 25-28% on ordinary income on a $1million income.
@@MichaelHollen Are you a CPA?
Agree! They should move the money, pay the tax. Given that it would be 30% loss but they can sleep better at night without the fear that this single stock might drop significantly.
@@macho2820 right. They don’t have to move it all as it sounds like that company is a good stock. This is why I said they should follow Dave’s advice of leaving 160k in the current stock and moving everything else and pay the fee.
If you move stock to mutual funds do you really get taxed? I thought it only gets taxed if you sell for cash.
All in on the index. Let it ride
Dave missed the most important part, which is the lesson from Enron. If the company goes bust overnight for any reason at all, you’ve lost your investment and your job!
Keep that 10% Dave talked about, but invest the rest in a good index or mutual fund, and have a professional do the transaction so you don’t make a mistake and create tax problems.
"oh I own this and it's awesome" he said in Kermit's voice ☠️🤣
dave is legit brilliant, and he has a legit brilliant strategy, the baby steps. but he's not right about everything. But I do like how he reversed the logic to avoid the sunk cost thinking trap.
Dave always get the right advice, but I need to know which company this is!
10x gain is a high beta stock. Regardless of it’s perceived trajectory sell 50% now and another 50% next year. Get professional advice for the remaining $250k.
It’s Enron 🤷🏾♂️✊🏾
Could be Tesla
Nvidia.
It’s a private company, so you wouldn’t be able to buy it. She said it “just got valued at” meaning it was a private funding round. If she said it “is valued at” it would be a public company.
Stocks are only for those people who understands businesses. So for those with less knowledge and insights, go to index or mutual funds.
I would sell majority of it. Spread it into other stocks and withdraw only a certain amount.
$750K P&G was probably paying at least $15k a year with it's dividend which has never been cut or frozen. Bad example.
Their tax rate won’t be affected by the capital gain. Assuming they make less than the 500+K threshold amount in earned income it will be 15% of the net profit on the stock.
Does Dave sell equity of Ramsey Solutions to rebalance into mutual funds? That would be telling.
That’s what I was thinking too
Dave is GENIUS!!!!!!
I’d put it all in $VOO.
Why?
Pull everything out & invest in low cost S&P 500 index fund.
Agree or buy good yield dividend focussed ETF and supplement income. I know about the taxes and growth implications but the cash flow would be great.
No all. At least half.
@@jimmymcgill6778 Yay depends how comfortable she is. But S&P is always the safest bet.
Waoooo.. what analogy of the money on the kitchen table.. waoooo
This is what the folks at Enron were doing!
Dave had great advice on this one.
This is really good advice that is actually pretty hard to follow.
Dave and his nerdy side kick
This is NOT a question about how much to allocate between stocks and other assets. It’s a question about how much to hold in a single stock. Do better, captioners!
Got you up in here!
That will be quite the tax bill
Death and taxes
Company Stock options are not stock. It's an option to buy for 10 years hoping that the stock will grow as an incentive to stay with the company. The question is how much does it cost to buy the stock option. So if you buy it, it is not taxed, it is only taxed when you sell it. This is not about having a million dollars in the stock, it is only the purchase cost. What he might want to do is "tender" the stock to buy more shares. So, for example, you buy 100 shares, wait a year+1day and tender that 100 share block to buy more of the option shares. By tendering, your only cost is the original purchase price of the original 100 share block, not the tendered share price. But this gives you the growth but not the taxes. Selling creates taxes, and we don't like taxes. "Never pay taxes if you don't have to." The hold time is forever.(Warren Buffet)
The advice for people in situations like this should always be “talk to somebody who knows what they’re talking about.” This situation is likely more complex than the caller explained or understands.
Did she mention options? Could have been RSUs that vested.
@@joejohn. Yes she did mention that they were options, about a million in value. Never said the purchase prices, but I assume if it is company stock, that it is ISOs instead of RSUs.
as long as you aren't taking short term capital gains.... also look at the tax implications, sell some this year, sell some next year jan 2nd...
Time for diversification...................
There is nothing wrong with stock picking. The average person should just not be using most of their worth to do so. And they should be doing it for a reason.
Investors make a big mistake with their equities/fixed income securities ratio. Unless your risk tolerance has changed due to age, dont mess with it.
Awesome content
The correct answer is; How much money would you like to lose?
take the money out, pay the hefty tax, put it in the a Roth IRA, let grow tax free.
how can you say that without knowing the sector and industry... seemed to well , by paying the "hefty" tax you can set yourself back a decade in cap gains. Let's say its tech and not Healthcare , if tech, then exercise as they mature. Never pull out and lose half up front. Will take you a decade to get back to that base level.
You are limit at $6000 per person per year for Roth IRA.
Odds are they probably make too much money to be able to contribute to a Roth IRA
I love hearing Dave Ramsey's Kermit the frog impression disagreeing with him. Hahahahahahahahahahaha.
He sounded more like Barney Gumble.
I thought it was Ernie.
@@kebas239 Who is Ernie?
@@inertiaforce7846 Bert & Ernie from Sesame Street.
@@kebas239 I just watched videos of Bert and Ernie on UA-cam and it doesn't sound like Ernie, it sounds more like Bert.
Let it ride!
Which stock? Tesla?
Tesla will be at 125 a share in two years time
@@mendoblendo321 Let me hear the reasoning.
Have seen companies go from great then the owner dies and the kids don’t want to run it so they turn it over to a corporate structure just look at Pamida the company was customer focused and then they were cutting jobs cutting truck shipments and things went down hill
Does anyone remember "Enron" back in 2000? All of those people who kept their money in Enron stock ended up dead broke.
You can cherry-pick anything. I’m not advocating having everything invested in one company, but your argument could easily be countered with: “Look at everyone who went all in on Apple in 2000!”
@@bradb4446 That has to be one one the dumbest excuses I have heard. You just demolished your own argument about "cherry picking".
@@markhazzard9730 you’re obviously missing the point. I was using it as an example to show why his argument was poor because I could just as easily use it against him.
Oh wait this is the op. No wonder it flew over your head lol.
@@markhazzard9730 also, why do you keep misusing quotes. Enron *was* a real company at one time. Putting it in quotes implies it wasn’t. Same with cherry-picking. That’s a real term people use, not made up.
😄😄 love Dave
I really like your thoughts on this matter. Have to also have very good dividend paying individual aristocrat stocks so that you wealth will grow.
XOM,RGR,MCD,SBUX & MO
are a few of my favorite dividend stocks.
Bought Tesla for $75 sold at $1200 so scary bought the farm 😂😂
🧢
You got lucky, what about Chitcoin? Is it 100K now?
Big cap
Sell it and put it in Dividend KINGs at or below fair value.
Yes I bought a ETF that is a Dividend fund .
The old paradigm is done. It's time to think smarter.
sell it and put it into the S&P 500
7:36 except I don't buy P&G products if I can help it because of their Gillette "toxic masculinity" ad.
So I guess I am keeping TSLA.
I think btc working out just fine lol
P&G is doing really good now
Exactly. I hope she didn’t sell.
Ramsey's advice here is ok, but it really depends on need as well. It seems that they don't need the money, so logically you would not anchor based on a % but what are you going to do with the money
PLTR
Looks like an amazing conpany
Agreed!
I need to know what company is this lol
I have a extra 8k! I dont know what to invest in
A low cost mutual fund that tracks an index like the s&p or a tech sector fund
Invest it all in Netflix
Will definitely do! Thanks a TON
Building a good investment portfolio is more complex
so I would recommend you seek Ted support. This
way you can get strategies designed to address your
unique long/short-term and financial dreams
Yeah that's right I think the best way is to invest with a
professional, at least it saves the trauma of too much
losses, This just surprised me because I also invest with Ted
If its not broken, dont fix it!!
Lol that's why you don't have a show
@@MS-ey3lblooks like it was NVDA they should have kept it
well, I hope the lady held P&G
I was advised to diversify my portfolio among several assets such as stocks and bonds since this can protect my portfolio for retirement. I'm seeking to invest $200K across markets but don't know where to start.
For a successful long-term strategy you have to seek guidance from a broker or financial advisor.
With the help of an investing advisor, I diversified my $400K portfolio across markets, and I was able to earn over $900k in net profit from high dividend yielding equities, ETFs, and bonds.
Please who is the consultant that assist you with your investment and if you don't mind, how do I get in touch with them?
My consultant is Nicole Desiree Simon She has since provide entry and exit points on the securities I focus on. You can look her up online if you care for supervision.
Thanks for sharing, I just looked her up on the web and I would say she really has an impressive background in investing. I will write her an e-mail shortly scheduling a call.
Cash it out and put it all in Netflix
😂
109% gain as of today, not bad
I concur that this is scary and the caller should sell the position down and then go all-in on Tesla stock with the proceeds. At these low prices they are practically giving away Tesla shares.
Tesla is a HORRIBLE stock. Don't waste your money.
The US has had over 100 automobile manufacturers since 1900. Some were acquired or merged, but most are just gone.
Umm, no. Anything associated with Elon Musk is a house of cards. Anyone telling you to go all-in on a specific company probably is trying to pump their positions in it.
@@scarpfish Exactly. NEVER invest all of your money in single stocks. You can invest small amounts if you want to play, but don't invest more than you can afford to lose. Mutual funds are the best vehicle for long-term investing.
Classic Harry Chu comment. Couldn’t get any more by the book!
i bet its Tesla
They have facilities in GA?
I bet you're a bot.
She should sell 800k and put in dividends/ high yield savings account and still get paid
You couldn’t pay me to hold Ramsey stock
A $ 30,000 investment in a year now $691. I would need a 5000% return to break even saving money is hard to lose it all so fast I wouldn't invest in individual stocks again.401k
I still have my income to build a new cd type retirement
She just needs to link her husband this video
Wonder how much of Daves worth is in Ramsey solutions?
Probably most of it. However, That’s different. It is his company. The caller does not own the company she has stock in
@@justinbowman2126 By definition, you own the company for which you own equity. You’re talking about a controlling interest vs. a minority stake.
Leave it all in and don't touch it for few years.
Go broke in less time!
No one is commenting on the massive elephant in the room! Neither Dr or the caller has mentioned anything about doing due diligence on the company. If you don't research the company, you are gambling!! The caller would not have even phoned in if they had confidence in the company. Poor form DR tut tut..
Enron, World Comm, Nortel. All awesome investments
AOL, Blockbuster, Sears. All long term solid holds.
@@JustinCase780 YES!
I think Dave intimated that but saying that you had to consider only the prospects going forward, but good point that it was not as clear as it could have been.
@@JustinCase780 Lol...
everyone who listens to this are so bloody loaded
Nvidia
Comment
HODL Dave HODL, you only lose when you sell🎆🎉
Second one 😉
SRB
not a lot today /..
🙏✝️
Stock options do not equal stocks. They merely have the right to purchase the stock at a discounted value. If the company doesn’t go public, the options are valueless.
He's so whack lol. Doesn't ask what industry or sector... And they didn't "bet the farm" it's how RSU and options work if your employed by the company....
It is betting the farm. If they didn’t sell and the price dropped they would be out of a lot of money. Say the options expire when the price is dropped then what? It’s life changing money 💰. If you don’t like his content I suggest you go watch something you actually like rather than being negative so early in the money lol
When you have your own show... write a book and become a millionaire...then maybe I'll listen to you
@@MS-ey3lb Dave is great for people with spending problems. He's not great for people who are trying to build/create wealth and already know how to manage their money. So many remarks on this particular caller were off base. The kid saying, we don't like to go to the casino to lose money. Casinos dont have IRR and EBITDA and GP margins and product demand, innovation a C-Suite... they didnt even ask the sector. Also when options are exercisable.
Stocks: when diversity actually matters
Can’t she open a trust with conditions to have remains donated, put all the money in the trust and collect an income over the years to avoid taxes?
No, but one thing they could do is take a portion of these shares and transfer them to a donor advised fund. Then they can use that donation to offset some of the taxes on the sale. This would only make sense though if they are already charitably minded, and it is still limited to 30% of their AGI (50% if it's short term capital gains).
@Ben Dover It's not at all wrong. It's a pretty common strategy actually.
That’s a charitable remainder trust. It’s potentially possible that you could do that, but I believe you’re only going to get paid from the whole life insurance you buy within the trust. (I think)
You are betting the farm on crony capitalism…next.
60/62 Uncle if tu saw me tu would consider buying me a shave and a meal but I am Tsar of Russia and Ukraine and worth Trillions of Dollars
Just buy a rental with cash! Sell everything that isn't in my billing program! Pay me for a book on how to invest! YOU DON'T NEED PASSIVE INCOME! Just own rentals!
I know it varies, but how much do i need to buy a rental property?? 5k
Rental properties is passive income
1st one😊
No one cares. Grow up.
@@zone453 you cared enough to reply🤷🏻♂️
@@charlesguzman9798 oh wow you got me. Go hover over you notification bar so you can get first comment on 80 other videos making you feel like you accomplished something
@@zone453 you’re still replying???? 🤣😂
@@zone453 is this your pet peeve
This is bad advice given with not enough data known. Yikes
Losing money is not scary as to losing the salvation!...repent and accept Jesus in your heart!
She only lost it if she sold it. I hope she didn’t because she would have wound up being just fine.