RSU & Equity Vesting:
The Complete Playbook
Your equity package is one of the most powerful wealth-building levers in your career. This guide walks you step-by-step through the StressTest.pro Equity Simulator so you can model, protect, and maximize the value of every share.
In This Guide
Foundations
1. What Are RSUs? Cliff & Vesting Explained
A Restricted Stock Unit (RSU) is a promise from your employer to give you company stock at a future date. Unlike salary, you don't receive the shares immediately — they are "restricted" until you satisfy a vesting schedule.
◆ The Cliff Period
The minimum amount of time you must work before any shares unlock. The most common cliff is 12 months (1 year). Some companies use 6-month or 18-month cliffs, which is now configurable in our tool.
⚠ Leaving before the cliff date = $0 in RSU value.
◆ Vesting Cadence
After the cliff, shares unlock on a regular schedule. The most common is monthly (1/48th of your grant per month for a 4-year plan), but quarterly, semi-annual, and annual cadences also exist. You can model all of these.
Tool Setup
2. Setting Up Your Grants
Input Mode: # Shares vs. $ Value
Most offer letters show a $ total grant value (e.g., "$100,000 in company stock"). Toggle your grant to "$ Value" mode and enter the grant amount — the tool automatically divides by the grant price to compute share count.
Multiple Grants
Most tech workers receive a new RSU refresh grant every 1–2 years. Click "+ Add" to model each grant separately. The Ladder chart aggregates them all into a single, unified vesting projection.
Cliff Duration: Years vs. Months
Some companies use a 6-month cliff or an 18-month cliff. Our tool supports both. Simply change the unit selector from Yrs to Mo and enter the exact number of months.
RSU Ladder
3. The RSU Ladder: Your Projected Vesting Wealth
Interactive Sample: 4-Year RSU Vesting with 1-Year Cliff event.
The RSU Ladder chart is your primary projection tool. It plots the projected value of your total grant over time, incorporating your assumed stock growth rate.
Total Value (Amber)
The full projected market value of all your unvested + vested shares based on the stock growth rate you set. This is the gross bull-case number.
Vested Value (Green)
Only the shares you've already unlocked and could sell today. This is your liquid equity. The step-function shape reveals cliff and cadence events clearly.
Unvested Value (Purple)
What's still locked up. This represents the 'golden handcuff' value — the amount you'd sacrifice by leaving the company today.
Reading the Metrics Panel
Total Granted
The total raw share count across all your grants.
Vested Shares
The shares you've already unlocked as of today.
Est. Net (After Tax)
The projected after-tax cash value of all vested shares. This is the only number to use for financial planning — it deducts your income tax rate at vest.
Hold vs Sell
4. Hold vs. Sell Backtest: Which Strategy Wins?
Example: Compounding single-stock (Amber) vs. Diversified growth (Green).
This tool models one of the most consequential decisions most employees never think about: should you hold your RSUs as the stock vests, or should you immediately sell and diversify?
Strategy A: Hold All Shares
Keep every share as it vests and let your single-stock exposure compound at the assumed growth rate. High upside if the company does well. High risk if it doesn't.
Strategy B: Sell & Diversify
On every vest date, sell your shares, pay the tax, and reinvest the net proceeds into a diversified target portfolio (e.g., S&P 500 at your target return %). Lower upside, protected downside.
How to Read the Results
The Winner Banner
The tool tells you which strategy produces a higher final portfolio value given your input assumptions. The "$X better" figure shows the absolute dollar advantage of the winning path.
Tax Impact Summary
Reveals the Total Gross Vested (pre-tax RSU value), Tax Paid (the non-recoverable cost), and Net Investable (what actually compounds for you in the "Sell" strategy).
The Key Input: Target Portfolio Return
Set this to the annual return you expect from your diversified portfolio (historical S&P 500 average ≈ 10%). If your company's expected stock growth exceeds this, Hold tends to win. If not, Sell tends to win.
Concentration Risk
5. Concentration Risk: Are You Overexposed?
Example of high concentration risk (65% in a single company).
Concentration risk is the danger of having too much of your net worth tied to a single stock. The Concentration Risk tab helps you quantify this exposure instantly.
How to Use It
- 1Navigate to the 'Concentration Risk' tab.
- 2In the sidebar, enter your total portfolio value — all investments excluding your RSUs (e.g., 401k, brokerage, savings).
- 3The tool calculates what percentage of your total wealth is tied up in your employer's stock.
Healthy vs. Dangerous Levels
Tax Strategy
6. Tax Strategy: Your After-Tax Take-Home
RSUs are not capital gains — they are taxed as ordinary income at the moment of vesting. The Fair Market Value of the shares on the vest date is recognized as income on your W-2.
Setting Your Tax Rate
Use your effective marginal tax rate (federal + state). For most senior tech employees in California or New York, this is 35–45%. Use a lower rate if you're in a no-income-tax state like Texas or Florida.
Sell to Cover
Most brokerages (Fidelity, Schwab) auto-liquidate enough shares to cover the tax withholding. The simulator mirrors this: if tax rate = 30% and 1,000 shares vest, 300 shares are immediately sold. Your net share count = 700.
Frequently Asked Questions
My company gives me a $ grant value, not a share count. How do I use the tool?
Toggle the input mode to '$ Value' using the toggle above the grant fields. Enter your total grant dollar amount (e.g., $150,000). The tool will automatically compute the implied share count by dividing by your grant price per share.
I have 3 different RSU grants at different prices. Can I model them all?
Yes. Click '+ Add' to add additional grants. Each grant has its own cliff, vesting period, and share price. The RSU Ladder aggregates all grants into one unified projection chart.
What growth rate should I use?
This depends on your conviction in the company. For a conservative estimate, use 0–5%. For a bullish tech company, 10–15% is common. The S&P 500 historical average is ~10% — this is a good baseline for comparison.
How accurate is the Hold vs Sell backtest?
It's a mathematical projection, not a backtest against real historical prices. It computes the theoretical future value of each strategy given your assumption inputs (stock growth rate and target portfolio return). It's best used as a framework for decision-making, not a guarantee.
Why don't I see my portfolio value automatically filled into the Concentration Risk tab?
By design. StressTest.pro functions as a calculator, not a broker integration. Linking real account values would require regulatory compliance and complex security infrastructure. You input your own value for instant, private, local analysis.
Model Your RSU Wealth Today
Input your grant details, choose your scenario assumptions, and get a complete picture of your vesting wealth — including Hold vs Sell, tax impact, and concentration risk.
Open Equity Simulator