Just as a single piece in a puzzle can be difficult to decipher all by itself, a Restricted Stock Unit (RSU) can be a bit of a head-scratcher as a stand-alone asset.

In isolation, RSUs are simply a form of equity-based compensation; your employer makes a grant, or a promise, to give you company stock shares under certain conditions. That’s nice. But if you’ve been offered this benefit and you really want to make best use of it, it’s worth considering it within the bigger picture of your overall investment portfolio.

First, let’s cover the basics. Then we’ll view how RSUs fit into your total planning puzzle.

Many clients with Restricted Stock Units (RSUs) are looking at a lower stock price right now and wondering how this impacts their overall compensation. After multiple conversations on the subject, I wrote this article to walk through RSU basics, two misconceptions of holding shares after they vest, and how to make smart RSU decisions in the context of your broader financial plan.

Basics of RSU Compensation

How a declining stock price impacts the value of vesting RSUs

Two bad reasons to hold RSUs after vesting

Thinking about RSUs as part of your financial plan

Create a plan to benefit from your company stock ownership

With stock markets fluctuating wildly, it’s especially important to understand the financial and tax implications of any company stocks your employer might offer. Restricted stock units, or RSUs, have become particularly popular in recent years. A 2017 survey by Ayco’s Compensation and Benefits group showed 72% of companies use RSUs, up from 37% just 10 years earlier.