BiggerPockets Money Podcast - What to Do When Most of Your Wealth Is in Company Stock

Episode Date: June 9, 2026

If you work at a startup or public tech company and have RSUs, stock options, founder shares, or a potential IPO on the horizon, this episode could save you thousands—or even millions—in taxes. Equity compensation can be one of the fastest paths to building wealth, but it can also lead to costly mistakes if you don't understand the tax implications, liquidity opportunities, and diversification decisions involved. That's why we sat down with Equity for the Win founders CJ Sturmitz and founding investor Toby Johnston to discuss how employees and founders can navigate concentrated stock positions and prepare for major liquidity events. Connect with CJ and Toby Johnston To work with EquityFTW: https://www.biggerpocketsmoney.com/equityftw About EquityFTW: https://www.equityftw.com/about To go beyond the podcast: Kick start your financial independence journey with our FREE financial resources - https://biggerpocketsmoney.com/ Subscribe on YouTube for even more content- www.youtube.com/biggerpocketsmoney  Connect with us on social media to join the other BiggerPockets Money listeners - https://www.facebook.com/groups/BPMoney We believe financial independence is attainable for anyone no matter when or where you’re starting. Let’s get your financial house in order! - BiggerPockets Money (operated by Early Retirement Group, LLC) has a paid promotional arrangement with Equity FTW. Under this arrangement, Equity FTW pays BiggerPockets Money a cash fee of $100 for each prospective client who books a meeting with Equity FTW and is attributed to BiggerPockets Money, including through links on our website, references in our podcast, and other BiggerPockets Money channels. BiggerPockets Money is not a client of Equity FTW and is not an investment adviser, and nothing on this page or in any BiggerPockets Money content constitutes investment, legal, tax, or accounting advice. This compensation arrangement creates a material conflict of interest, because BiggerPockets Money has a financial incentive to promote Equity FTW and to encourage listeners and readers to book meetings, regardless of whether Equity FTW's services are appropriate for any particular individual. The opinions expressed in BiggerPockets Money content are editorial; however, listeners and readers should consider this financial relationship when evaluating any statements about Equity FTW or its services. Equity FTW is solely responsible for the financial planning and advisory services it provides to its clients, and any decision to engage Equity FTW should be made based on your own independent evaluation and, where appropriate, consultation with your own qualified advisors. Learn more about your ad choices. Visit megaphone.fm/adchoices

Today's episode is very timely, with major private companies like SpaceX going public this week and more employees finding themselves with significant wealth tied up in company stock, we're tackling one of the biggest financial decisions many people will ever face. What do you do when years of stock compensation suddenly turns into real liquid money? Welcome to the Bigger Pockets Money podcast. My name is Mindy Jensen. And with me as always is my doesn't currently hold any SpaceX stock co-host, Scott, French. Thanks, Mindy. Yeah, great to be here. And I don't have any of these options that we're going to

talking about today. But looking forward to helping out those who do. Before we get into today's episode, Bigger Pockets Money has a paid referral relationship with Equity for the win, or Equity FTW, the firm featured in today's conversation. We will receive compensation when listeners book a meeting with them. This creates a financial incentive for us to have them on the show and partner with them, which you should consider when evaluating what you're here today. So full disclosure of the arrangement is in the show notes of our at biggerpocketsmoney.com. Today, we're joined by C.J. Sturmets and Toby Johnston from Equity for the Win, a flat fee financial planning firm that specializes in equity compensation of the types

that we're going to be talking about today, concentrated equity positions, for example. Together, they've helped countless employees navigate the opportunities and challenges that come with concentrated stock positions in sudden wealth. So they're the perfect people to have on to discuss the topic today, and we're excited about a partnership that we're entering into with Equity for the Win, as we just mentioned. As a reminder, this episode, as always, is not investment advice and is for entertainment purposes only. C.J. and Toby, welcome to the Bigger Pockets Money podcast. Yeah, thanks, Scott. Thanks, Mindy. Thank you. So can you give us a quick overview of what you guys do in your background and why we should

listen to you about equity compensation and the intricacies of that? I guess I can go first. So I'm C.J. Sturmets. I am the founder of Equity for the win or Equity FTW. I'm a certified financial planner and certified equity professional. I've lived in Silicon Valley for almost 10 years and I've been advising people in tech basically that entire time. Living in Silicon Valley, basically every employee out here receives some form of equity compensation. And I don't know, live here long enough. You'll see a lot of things and learn a lot. I really enjoy teaching and writing about equity compensation topics.

So, I mean, some background on the first. is we actually started as just an educational website because I felt like there was a big gap between what really high-level executives knew about equity compensation and what regular employees knew. And so I just kind of wrote articles for quite some time. And then over a while, I realized that there's a huge need for good financial planners and tax planners to educate people and help people make better decisions with equity compensation. So I don't know, we've been doing it a long time. If you read our content, you can kind of get a sense that we know what we're talking about, but I don't know, you can see for yourself, hopefully.

And Toby? Yeah, well, first thanks Scott and Minnie for having us on the show. We're excited to be here. And yeah, like CJ said, Equity, FTW is an advice-only firm, and that's one of the main reasons why I'm supporting it. CJ is the face of the firm. I'm actually retired, retired a couple years ago from a larger firm, but spent over 20, years of my career in Silicon Valley focused exclusively in this area. And so while I don't meet with clients anymore, I'm a big supporter of CJ and really a kind of a true believer in this advice-only

model. Like CJ said, there's just so many people that need good advice that may not have a lot of liquid AUM for a traditional firm to manage. And so they tend to get overlooked and don't get the best advice. And so that's what we're here to change. Awesome. Well, I'm a super excited about Today, you know, I think that the goal for today's show is to frame the problem, right? This is a good problem that you have, if you're listening to Today's show. This is, I've come into sudden wealth. I have hundreds of thousands, probably, or millions, maybe even more than that, in a concentrated equity position in company stock. That could be via stock options.

It could be in ownership that has vested. It can be in other types of equity or equity-like instruments. Or it could just be a concentrated position that you invested in from a private equity firm that's now, that's now going to be. go public to some degree. And so the goal I think that we're framing this with is my goal is I have this wonderful win and now I want to move from this concentrated position to a different portfolio or I want to realize the liquidity and spend it on something or use it for some life purpose or give it away. And I want to do that tax efficiently without stepping on any landmines. So that's the framing of this. And in that context, can we maybe introduce the kinds of events what I should do in the years or

months leading up to the liquidity events for these. Yeah, I really like the way that you frame that Scott. And so I'm going to do a little framing myself here, which will hopefully serve us well during this discussion. But I'd say in answer to your question specifically, you want to first get organized and then you want to get a plan. So a little bit more color on the get organized. Getting organized in this context means knowing exactly what you own.

So like you mentioned, there's all different types of expectations. You know, there's stock options. Within those, there's non-qualified stock options and incentive stock options. There's ESPP, there's RSUs, there's founder shares, there's probably other stuff that I'm not mentioning, right? Yeah, performance share units and- Yeah, performance share units, which is something that, you know, SpaceX has. So what exactly do you own? When did you acquire it?

You know, what is your tax cost basis? When did you start your holding period? A bunch of things. and we'll get into more of details about this organized principle, but you got to know what you have before you can do anything else. And then you need to get a plan. And I'm going to propose three layers to this plan. So the first layer is the big picture.

You know, some people will call it a financial plan, but it's basically, you know, what do you have in your financial life? What are your short, intermediate, and long-term financial goals? That's the kind of the outer layer of planning. The next layer, I'm going to call it, diversification planning. So, you know, you mentioned how are you going to get liquid, how quickly, what are you going to use the money for, et cetera, so that diversification plan, and then the inner layer, which a lot of people mistakenly go with first, is the tax planning.

So how are you going to get diversified in a tax efficient way? So get organized and then get a plan. Toby shared a really good analogy. I mean, I don't, Scott, do you wear glasses? I do, yes. Okay. So, Mindy, are your glasses actually working glasses or are they just for looks only? No, I see shapes if I don't have my glasses on. Toby had a pretty good analogy of like, you can share the analogy better than I can, Toby. Well, so the analogy is there's a lot of different ways to come at this topic of concentrated stock position, equity comp, right? And so just like when you go to the optometrist, you know, you're sitting in the little chair and they're doing the, you know, is it, A or is it B? Is it one or is it two? And things are getting more and more clear. So in this context,

you have several different lenses that you can look through. And so that first lens is the planning lens that I just hit on, which is the big picture and the diversification and the tax plan. The other kind of set of lenses, so let's say that first one's your left eye, the right eye now to really bring things into clarity into true focus is how, how does that? big is the company that you're at? So are you early stage? Are you about to go public? Are you a mature public company? Because the answer to that final set of questions really impacts the tools that are available to you, the strategies that you can use to plan. And when you overlay both of those, that's when you really get a true, clear picture of what you should do going forward.

Let's talk about what the liquidity opportunities look like. Because we know we have a different bunch of types of options or equity that we can get into in different tax treatment. But in these cases, are employees able to liquidate over time, or do they have one-offs? Or what are the opportunities and how does that change the way we approach the strategy here? There's a sliding scale of liquidity availability based on the size of the company we're talking about. So early stage startup, if you're there, basically there's going to be zero liquidity because it's a very new startup. They aren't going to let you sell any equity that they're just barely granting you. But over time, as companies grow, the scale of liquidity availability increases.

So, I mean, we're all familiar with SpaceX, so they're planning to IPO. But there are a lot of other companies who, even along their path to IPO, they're offering one-off situations, which are often known as tender offers, where employees and shareholders are able to sell company's stock. There are also, sometimes companies will allow employees to sell shares on secondary markets. It's kind of strange to get used to, but they're marketplaces. I mean, I don't know if we're allowed to specifically name the companies on the podcast, but there are some, the big ones are Hive. So Hive even has a little secondary market that shows if you're at a private company

that's not publicly available, it shows what people are paying for the company's stock. same thing with like forge global and equities in we don't see a ton of our our clients using those marketplaces but it does happen from time to time the secondary markets are basically if you're on the selling end it's kind of like a last resort because it's it's basically the equivalent of a hard money loan in the real estate world the company equity just because there's so much there's layers of fees that get assessed and so you're not getting a true fair market value for whatever you're selling If you listen to Bigger Pockets money, you know that term life is a bridge, not a forever product.

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and the size of the private company moves along there. So that makes sense to me. You mentioned like 40 different types of equity. I think it was 8 to 10 different types of equity, can you help us bucket those in ways that we can understand from a tax treatment perspective? How should I be thinking about this in terms of groupings about what kind of taxes I should expect when the liquidity event comes? I'll take a first crack at that and then CJ, you can talk about the tax treatment for the different types of equity. But the life cycle of these types of companies in terms of the equity, you usually start off, obviously you start off with founder shares, then the early employees

normally receive incentive stock options. Those are limited in how much you can receive in a given grant that will vest in a given year. So fairly quickly, the company will move on to non-qualified stock options and then ultimately end up issuing restricted stock units as they get more mature and closer to IPO. So, CJ, how are those taxed? Founder shares, essentially if you do it right, someday they will all be treated as, I mean, I'm assuming your listeners know the different types of tax rates that people can be taxed at. I think that that's fair. Well, since you mentioned it, right, we have ordinary income and equivalence and we have long-term capital gains and qualified dividends and equivalence. And those are the two broad categories. And we want to move as much

as possible into the long-term capital gains bucket if we can. Yeah, exactly. So typically, ordinary rates will be higher than long-term capital gains rates. So the game is trying to get your equity to count for as much long-term capital gains as you can. But yeah, so founder shares, basically if you do it right, everything can be treated as long-term capital gains. Those are kind of easy. So after founder shares, let's go the other direction. So let's start with most common. So RSUs are by far the most common form of equity compensation that people receive. It's what, if you're a public company, you're probably granting your employees restricted stock units. And they're everywhere, basically every company. And so RSUs,

of a public company are taxed once they vest. They're taxed your ordinary rates. They get treated as ordinary income. There's some interesting planning scenarios where companies are required to set aside a withholding once they vest. And so that withholding oftentimes doesn't actually cover the taxes owed for the employee receiving the RSUs. So the statutory rate on RSUs when they vest at the federal level is 22% up to 1 million. And then above one million, and then above one million, it's 37%. So basically, if you're in the 24, 32, or 35% tax bracket, it creates a little bit of an under withholding as they vest. So that's always a planning opportunity. Now, there's a difference, too, between RSUs of a public company and a private company. So at a private company,

usually once they start issuing RSUs, it's a sign that they're more mature of a company and potentially targeting an IPO at some point in the future. RSUs of private companies can be either what's called the double-trigger RSU or just still a regular plain RSU that's taxable at Vest. So these bigger tech companies that are approaching IPO, like some good examples, although I don't know if Stripe will ever IPO, we'll see. But Stripe, for example, issues RSUs. And when they vest, even though the company is private, they are still taxable. Other tech companies that are private, when you have RSUs, oftentimes when they vest, it won't actually create a taxable event because there's a second trigger on them that says you have to basically, in order for the

taxable event to occur, there has to be a liquidity event, typically in the form of either a tender offer or an IPO. And then at that time, you meet the time requirement for the RSUs to vest. And then once the liquidity event happens, then all those double triggered RSUs are released and the taxation happens. Makes sense so far? Yeah. So your RSUs of your non-public company could be long-term capital gains for you? No. No, they can't. So basically, they sit in kind of limbo mode. So if I'm at, you know, XYZ company that's not publicly traded, Mindy, you give me a thousand RSUs. I stick around for the company for a year and I get to have them meet one of the requirements. Basically, I work for a year, they vest and then after that they just oftentimes will hang out

kind of in this limbo mode until there's a liquidity event. And then at the time of liquidity event, that's when they become taxable. But it's a short-term gain. It's treated as just plain old income. Oh, it's ordinary income. Yeah, it's just like part of your salary, basically, like you got a bonus. And so that's when you're holding period starts. So with the grant of RSUs, nothing happens to you tax-wise.

You don't own anything yet. Until those RSUs vest and fully vest, that's when the taxation occurs, and that is day one of your holding period. So if you were to sell on day two, you have a very small short-term capital gain or loss. If you were to sell more than a year later, you have a long-term capital gain or loss. And that's why with RSUs, and I'm sure this may come up again later, our standard advice is when they vest, sell them. So companies sometimes will give you the option to have your RSUs vest,

withhold shares and then they'll deliver to you the net shares so let's say 100 you know you vest $100 they withhold $40 and they deliver to you the equivalent no 60 shares in this example you can hold those but you've already fully paid tax on them if you don't sell those right away it's like you got a bonus of $100 in this company bonus they took taxes out and you took the left over 60 and bought all company stock. So when you pose it like that, most people will say, oh, well, if I got a bonus of $100 and they took out 40, I'd want some of that or all of it, you know, and then I'll decide, according to my overall investment plan, if I want to buy $60 of my company. I think that's a wonderful framework. We've talked about founders, shares, we've talked about

RSUs. What is the next most common type of employee compensation that's equity like? Yeah. Options. both ISOs or incentive stock options and NSOs, non-qualified stock options. I think in order of what's easiest to understand is probably non-qualified stock options. So options by nature are what are considered appreciation awards. So in order for you to get any value from an option, there has to be appreciation in the stock price. So the way it works is when an option is granted to you, say it's granted at $10. bucks. If the company never grows and the share value never increases, you can't ever have any gain within your option because you can pay 10 bucks for a share that is worth $10, therefore there's

no value unless there's some appreciation. As a company grows and as the share price grows, say your option goes from $10 to $15. The difference between the value of $15 and $10 is known as a couple different things. It's known as the bargain element or more commonly known as the spread. So that $5 kind of embedded, similar to a stock, it's like a gain but for an option. And so that gain, when you exercise, will have different ramifications if it's a non-qualified stock option or an incentive stock option. So how do I know which one I have and what I ought to do as much as possible move it into the long-term capital gains bucket? This is where the planning gets fun. So the non-qualified stock option, that spread is if you were to exercise is treated as

taxable income. And so if you exercise, say you're at a private company and you exercise a non-qualified stock option that has a $5 embedded gain or spread, you would then owe taxes immediately on that $5 spread. I'll explain a little bit about how that works. So that's considered compensation. So similar to the the RSU example, that $5 spread is, it's basically like getting a company bonus. It gets a little tricky. It depends on if the company is private or public because there are withholdings that are required on that $5 spread in this example. Your normal federal, state, FICA, Medicare, et cetera.

So if it's a private company, usually, well, hopefully for the employee's sake, there's a provision that will allow the company to withhold shares to satisfy those withholding taxes. that need to be remitted to the government. If there's not that provision or if the company isn't flexible, doesn't allow that, then the employee actually has to write a check to the company. So we're working off this example of a $10 strike price that's now worth $15.

That creates the $5 spread. So if the company won't withhold shares to cover my taxes, I have to write a check for both the $10 and the taxes on the $5. And so that can get really expensive really fast. And so that's why you don't. don't really see a lot of people exercising non-qualified options in private companies unless it's early stage and the strike price is really low. Like if we're talking about 10 cents and a 15 cent value with a 5 cent spread, you're much more likely to exercise something like that as a

private company than you would the $10, $15 example we've been working off of. With a public company, pretty straightforward, shares are sold and money is remitted to satisfy the withholding So you don't have to come out of pocket then. Does that make sense? In practice, how often do you find people coming out of pocket and having the need to come up with cash in order to buy their shares or exercise their option? For NSOs, a lot of the times what ends up happening is an employees granted NSOs really early on when they have no faith in the company. So it's like, you know, they get a bunch of NSOs and then they're like, okay, yeah, this is cool. Like maybe this will be worth something someday. I don't want to put any money into this.

Now, depending on how much money you have and what your means are to exercise and take risks early on, like, you know, whatever. But what happens most often is nobody has any faith in the company or very little faith and doesn't want to put money in. And then the company actually does something and becomes worth a bunch of money. And so now it's not necessarily the exercise price that is expensive. It's the tax. And so most commonly, if you have NSOs of a private company, people just kind of kick the can

down the road until they're able to both exercise and sell simultaneously. Totally agree with what CJ is saying there. There is also, though, a best practice for an early stage company that allows you to early exercise your options. So we've been talking about a case where there's a spread between the option value, the strike price, and the current fair market value of the company. But when those options are granted to you, there is no spread. By law, the company only grants you, you know, options with zero spread.

So if you were to exercise as soon as they're granted before the value goes up, before the next 409A, which is how private company shares are valued, then there is no spread. And so there's no taxation. There's no compensation element there. So then it just becomes, cannot afford this strike price. And is this an investment that I want to make? And what is the advantage of doing that? Does that change my tax treatment on the other side?

Well, that drastically changes it in that it starts your holding period. And so now you only have to, if we're talking about non-qualified options still, now you only have to wait a year. And then if you sell those underlying shares, you got long-term capital gain treatment. Even, you know, I don't know if we save this till the end, but you mentioned there's ordinary income tax treatment. There's long-term capital gain treatment. There's short-term capital gain treatment. there's also zero tax treatment, right? And that's qualified small business stock.

So that only applies to shares that you may have purchased early stage when the company meets the requirements of a small business. But if you're able to check those boxes for this, it's called Section 1202, qualified small business stock, and there's a few boxes that you got to check, you know, three to five your holding period, et cetera, et cetera. Then your gain up to $10 million is tax-free, federal. In California, they'll still tax you on that, but in most other states, you won't get taxed at all. So the Nirvana, the best practice is early stage, early exercise, buy your options, sell tax-free down the road.

Do you commonly give advice to move out of California? How often do you give advice to move out of California, Toby? Well, you're not in California anymore, so. So I'm in Utah. I'm enjoying a four point, seems like it gets lowered like every other year, but it's like 4.4%. here or something instead of 13.3. Residency planning is definitely part of all this. And, you know, when we talk about what moves can you make, you know, shortly before your company goes public, that is definitely one of the moves to consider. If your position is one that can be done remotely, or if the company has offices in a lower tax jurisdiction, usually you're not going to move just to save on taxes.

but it's fairly common though for, you know, lifestyle and tax planning to align. And yeah, you can change your residency and save tons of taxes. So if I'm living in California, working in California because I'm working for one of these tech companies, and then here comes my liquidity event. If I'm not going to sell right away, I still have those shares, I can move to another state and then I'm not paying California taxes on those because I'm no longer a resident of California. even though I got the stocks when I was a resident and an employee in California. California is wise to this game, by the way.

You can't move back right afterwards. They're going to get you. As in all things, tax and plan, it's a little more complicated than that, but basically, yes, the kind of tax that you will be able to avoid is the long-term capital gain tax. Which California doesn't have preferential treatment of, by the way. So in California, a long-term capital gain is no different than the second. you earn from a company. Short-term, long-term gain.

Income is income in California, the great golden state of California. But across the country, investment income, which capital gains are considered investment income, portfolio income if we want to nerd out on taxes, that is sourced to your state of residency. The kind of income where California, New York, other states, they'll reach out their hand and gather those taxes back in, even if you move, is on your R&R. RSUs in your compensation element of your option exercises. So, for example, if you have a ton of RSUs in the company that goes public and they continue to vest and you move from, let's say, California to Nevada, what they're going to do is as

that vest occurs, instead of saying, oh, source all that income to Nevada, which is tax-free, they're going to source part of it to California and part of it to Nevada based on where you were living working over the course of the vesting period. So by moving with RSUs, you do stop the bleeding, but you don't get rid of the tax that you've already basically obligated yourself while you were in California. I'm going to hijack us for a second here because I just nerded out yesterday actually and built this like income tax projection tool, a vibe coded of course. You know, we show all the deductions, all the different types of tax treatment, go through the federal stack, go through the state stack if it applies, all that kind of stuff. Just.

Just to give you an idea here, this is a $194,000 household here. If we give them a $500,000 capital gain in Alaska, their tax bill in this situation is going to be $126K versus California. It's going to be $182,000, right? So, I mean, this is a huge deal, $50,000 on this $500,000 gain in this scenario. But you can kind of play around with that and see, hey, in D.C., it's going to be very expensive. In Colorado, it'll be somewhere in the middle because we have a flat tax. This could be a big deal if these numbers start to get very, very large. with SpaceX or another zero on there and you'll see how big of the deal.

Yeah, I mean, you do $5 million, you do $10 million. I mean, it's very consequential planning. The highest tax race in California don't even kick in until after a million. Yep. So now we're going through the whole California stack here for this particular game. This is a tool available at biggerpocketsmoney.com slash income tax projection. You can find it in the resource section here and play around with that. Anyways, I thought that would be fun.

I tried to build like an option, stock option modeler. And this is as far as I got because it's so, then you have like 40, like Toby mentioned, 40 different types of options and how they're treated with their basis is. And that was too complex for me to vibe code. So we haven't gotten to the funnest one. CJ is going to tell us about incentive stock options. One correction on the QSBS thing is I think right now, now it's 15 million of excluded gains, I believe.

10 to 15 million, depending on when you acquired the stock. If you acquired it after July 4th, 2025, then your holding period is three to five. five years in your excludable gain is 10 to 15 million. So venture capitalists in Silicon Valley have known about qualified small business stock for a long time, but the wider, you know, tax world has just learned about it in the last several years. So happiness in America is starting a small business, scaling it to three to four million in EBITDA and selling it for 30 million bucks, you know, 15, 30 million bucks depending on if it's you and a partner. Is that right? That's right. And the 10 to 15 million,

So we won't get too far. And this is a whole another episode, Scott. This part of the planning Toby just loves, yeah. That's the first bite of the apple. You can actually 10x that if you do other more advanced planning and you can use family trust and all kinds of gifting and whatnot. So this is the gift that keeps on giving to venture capitalists, lobbyists forever. All right.

So what's the last type of option here that we have? So the other option, sometimes more complicated, but also can be really beneficial. and is kind of a nice in-between of you don't have to do anything right at grant and you can kind of wait and see what happens are incentive stock options or ISOs. So what's unique about isos is after grant and there's been appreciation. So let's keep rolling with the $10 grant price and exercise price and then it becomes worth $15. When you exercise ISO's, that spread, it isn't treat it as ordinary income. Rather, there's a separate calculation that happens on the AMT side or alternative minimum tax side of your tax calculations for a given year. Depending on the level of

ISO grant you've received, you can exercise a lot of ISOs or some ISOs without incurring any tax and all you're paying is the exercise price. The exercise price of $10 per share, that's still money that you have to put into the company. So it's a little bit of a risk. But, But a lot of the times, like SpaceX, for example, there are people who received ISOs of SpaceX back when it was worth a dollar or, you know, 97 cents or something. They're paying, you know, pennies on the dollar. But if they're exercising at a point when, well, I guess SpaceX today just announced after the split, say their exercise price is like 50 cents and the stock price is now worth $135. That's a huge embedded spread on an incentive stock option. These coastal companies, you know, they don't like to make any money. So they raise more more money and burn it and then grow revenue and there's no cash flow ever. But, you know, here in Colorado, we like to actually drive EBITDA or cash flow from businesses. My question in relation to ISOs is if the company that I work for does not make any cash, there's no real urgency to exercise that option, although it could be good or bad, but I have that option really whenever. But if my company's generating a lot of cash, don't I want to convert that into equity in the company relatively early?

even if I can't get a liquidity event because then I'll participate in the cash generation of the business, if it is in fact cash flying. Your question is more in the context of a closely held business where the shareholders is also probably a flow-through entity like a partnership or as corporation. And so that's not the stock option world that we're talking about. What you're saying definitely potentially makes sense in that closely held context. Really with incentive stock options, it's similar. It's going back to the appreciation award.

And so with an incentive stock option, you potentially can have less risk compared to an NSO because the tax treatment might be better early. And then after exercise, potentially everything can be treated as long-term capital gain if you hold it for the requisite time period. Yeah. So just to contrast those, so you have your non-qualified stock option. When you exercise that with the spread, the spread becomes compensation to you. And you have your incentive stock option. The incentive piece is that when you exercise, there's no compensation element. And when you sell, you get long-term capital gains with no compensation element if you hold two years from grant one year from date of exercise.

So there's some holding periods that C.J. was referenced in there. Got it. Are these the most common types? We have founder shares, stock options, incentive stock options and non-qualified stock options. We've got RSUs. And what was the last one that we've mentioned here? Well, stock options falls under two. So ISOs and NSOs.

The other big one that's common amongst public companies are ESPP shares, so employee stock purchase plans. I can't remember the percentage, but it's well over half of tech companies offer an employee stock purchase plan. Amazon doesn't. Google doesn't. But there are a lot of other tech companies that do. And it can be a pretty nice benefit for employees. It's basically, think of an ESPP as the company essentially offers you a discount to buy their own stock as much as 20%. And then if you hold it, then you can get long-term capital gains on that as well.

You know, it's like when the company offers a 401k match, you want to take advantage of that at least up to the match. An ESPP plan can be thought of similarly, but with company's stock. you want to subscribe to get the company discount, because even if you sell it the next day, you're still benefiting from that up to 20% discount. I can't get enough people to do this thing. I get that there are some situations where there's like rules or lockups or whatever that create risk for the person. But like, if you have the ability to just buy company stock and sell it the next day

at a 15% discount, it's just like free money. It's like a raise. If you're at a company that offers ESPP, it should be part of your cash flow, waterfall, whatever you call it. Priority lists. Order of operations. Yeah. So one clarification, with ESPP, there are bad ESPs.

I think I sent you a note on like, I mean, I don't want to call them out specifically, but, you know, dollar tree, for example, they have a one year holding period requirement after purchase on ESP shares. I mean, then it's like, I don't know if this is worth it, because you don't know how a particular stock is going to do. So then it's a lot more nuanced of a decision. But if you are able to turn around and sell an ESPP purchase right away, I mean, yeah, that's basically free money.

Let's go to the crux of the problem here, right? I have one of these types of options here, regardless of whether it's a long-term capital gain or ordinary income. I don't want to screw that up or create a situation. I want to be aware of what I need to do to move it to a long-term capital gain. But I'm going to be in the high-income earning bracket, maybe for the first time of my life in this situation, right? I actually read a stat, fun fact, 12% of Americans have been in the top 1% of income. earners. People think of like the top 1% is like this class, right, of people. And there are certainly people that stay in there, but it's fairly rare to stay in there for a decade or more.

Many people move in there one time or a handful of times in their life and move back out over that. So I'm going to be in this high income tax bracket and that's going to create problems. It seems to me that I would want to move this across several years to some extent to be aware of what those advantages are, even though that may keep me concentrated in the stock to some degree. I'd be curious your perspective on that. What are the tax consequences that hit a typical tech worker, not the executive making tens of millions, but the typical tech worker is making hundreds of thousands to maybe a few million in one of these liquidity events? How should they think about or handle it from a tax planning perspective? Yeah, so I can get us started on that. So, you know,

going back to the three layers of planning, if you don't have that plan in place, it can be really tempting to sort of let the tax tail wag the dog. Whenever you're trying to get enhanced tax benefits, you're taking on some risk. And in this case, we're talking about company stock. You know, a lot of these companies are in the tech world. They tend to be more volatile than, you know, your proctor and gamble, etc. So you really need to factor into your planning, just the stock risk, risk of the stock price going down because I've seen all kinds of awesome tax planning, which requires usually holding longer, get erased in a matter of hours in the markets, especially with these sorts of companies.

So that's number one. So start with that big picture first and see how much money do I need to walk away from the company with? I think that brings up like a emotional question. Maybe CGLS I'll ask you this one, right? We talked to somebody the other day that emailed us, Mindy and I, and basically the FOMO of moving on from the company stock was a big issue there. You know, I get that there's a textbook answer to that that you're going to give in this. But I think it's a real problem for folks, right? I joined this company.

I'm at SpaceX. It was a dollar now. It's going to IPO for several trillion. What if it goes to 20 trillion and we go to Mars? You know, I think that that's a real challenge people have with it. And there's a probability that it works. And how do I think about it? This may be a terrible analogy.

shared it with Jason and Brian Tate, the other people who we have working at Equity FTVW. But for SpaceX, a lot of times I think about concentrated stock positions, literally like a rocket ship. So you know how rocket ships have to have like boosters to get into orbit? I mean, in the case of SpaceX, SpaceX is literally the booster getting you to where you want to go. And then eventually you have to ditch the boosters. You may not have to ditch all of that. I mean, I guess I don't know much about, I guess, space travel and putting things into orbit. But in terms of kind of letting go of the things that gets you where you need to go, ultimately, I think that goes back to the bigger picture thing that Toby's talking about is eventually

you have to let go as hard as it might be. It never feels good to sell any company's stock. Whether it's SpaceX, whether it's Nvidia, Apple, Apple employees will regularly say, oh, my biggest regret is selling Apple. You know, it's like, of course. But at the same time, you have to think about the bigger picture of what Apple has afforded you to do in your life. and how you use proceeds from Apple sales or whatever stock sale.

I don't know what you think about my analogy, Toby. I don't know if you've ever heard that. I think it's good. I mean, the reality is that this area of personal finance, it's more emotional than any because it's, you know, these people have, they've literally been putting in 40 to 80 hour weeks for years upon years, right? This is their baby.

And so they are very emotional. I mean, they, you know, Hodel didn't exist when the last tuck bubble burst, but there was plenty of people hodeling on to their Cisco and their juniper and whatever stocks that just absolutely cratered, right? And so if you've already met your financial goals because you've been systematically selling tax efficient manner, then if something does go down, then it's much more palatable. You know, people sometimes ask like, what's the biggest mistake that you could make,

you know, for someone in this situation? And I kind of have two answers to that. I think the biggest mistake is waiting too long to sell stock while you ride the price down to irrelevancy. That's on one hand. The other hand is selling everything you can day one while the stock really takes off, right? Generally speaking, when I was working and giving advice, I would try to avoid both of those scenarios and create a systematic plan that removes the emotion that's based in that big picture

a financial. Yeah, that I think is the crux of this is I believe in the viability of the company that I am working at. I think they're going to do great. I don't want to sell because I'm going to miss out on all of that exponential growth. By the way, CJ, I really like that booster comment that actually put it into perspective for me because I do have this stock that it has taken me far, but it's also a really large portion of my portfolio. I am old enough to remember Enron. and I know Scott doesn't love this example, but Enron went to zero. It didn't just go down. It's worth, I think it's currently worth nothing, right?

Like, it's gone. It's not even on the stock market anymore. And there were a lot of employees at Enron who were married to employees at Enron who had their entire portfolio in Enron stock because it was doing so well. So that always lives in the back of my mind. Tech companies come and go. They were great and now they're nothing or they were great and now they're a dollar. And it's hard to sell because you think it's going to go up, but you don't hold it because you think it might go down.

You definitely get a skewed perception when you're inside the company. You're seeing insider information all the time. And you're thinking, hey, this is great. This is never going down. The reality is that it does. And it may be someone starts a war, you know, nothing to do with your company. I think that brings us to like what ought you to do. And I prepared a hypothesis for today for like what I think might be an acceptable answer.

to someone in this situation, but I love to run by you and get your feedback at nip picks and edge cases where it breaks down. My assumption here is that employee has a taxable gain. So this probably doesn't apply to the SpaceX IPO because many of the SpaceX employees are gonna have RSUs, when they vest, or those are gonna be ordinary income. And so then they can sell all of that,

the remaining stock if they want to for no capital gains, they've paid tax on the ordinary income. Let's say that I'm an employee that has some kind of taxable gain that I have the option to, liquidate or not, regardless of whether it's long-term or short-term. So first, I'm going to have an end-state or target portfolio in mind. If I could wave a magic wand, convert my entire position to cash and redeploy it, what would

that position look like? And for this example, I'll use a Boglehead portfolio. It would be an index fund or maybe like a small two or three-fund portfolio. That's pretty simple. I'd move towards that fund. That would be what I'd waive my magic wand to. Maybe I'm 10 or 25% in my employer stock if I really believe in it, but I'm moving the vast majority to this diversified, diversified portfolio. So that's why. One and a half, step one and a half

would be, how much do I want to give away as well? So I could, you know, if I want to charitably contribute something, then that factors into this. Step two is identify the type of stock I have and its tax basis and treatment and plan on that. Then I would project my income tax, which is why I built this vibe-coded income tax projection model. And I'd say, hey, this is going to stack on top of the other things in my life. Like, next year's going to happen. I'm going to earn a salary. I'm going to have some kind of simple interest from my high-yield savings account. I'm going to have some qualified dividends from my existing stock portfolio, those types of things. And then whatever I sell of the stock, ordinary or capital gains base, is going to stack on top of that. And that's going to

push me through various cliffs, which is step three. I've got to identify these cliffs. And the big cliffs on the long-term capital gains side are going to be the 0% tax bracket, which is like $98,000 for a married couple. It's surprisingly high. The 15% bracket, which goes up into the $613,000 for a married filing jointly couple, and then the 20% long-term capital gains tax bracket. In between, there's the net investment income tax threshold, which is about $200 or $250,000, depending if you're single or married filing jointly. I don't want to go beyond that unless it's intentional. I don't want to be surprised by that next year. Step four would be, once I've decided how far through these cliffs I want to go to, I will sell almost all the way

up to that cliff because I might be wrong on something. I might get a little more interest than I was expecting or I might forgot about that savings account. I'll do that immediately to do that cliff and then I'll true it up at the end of the year and then sell the next chunk early in the following calendar year up to that cliff. Maybe I'll repeat this for one to three years, but I want to move fairly quickly towards my target portfolio. But I'll repeat that over a course of one to several years depending on what my tax strategy is and the risk I'm willing to take in that concentrated position until I get to my target portfolio. That's my theory coming into it. I don't know how many of your clients come in with theories that are as crazy as that.

But I love your reaction to it and whether I'm off base or if that's something that you're commonly doing or if you have a much simpler approach that can throw out what I just said. I mean, there's a lot of good stuff there. I've seen crazier plans than that. That's for sure. That seems like a pretty decent plan. Well, I appreciate it, CJ. Thank you. So SpaceX RSUs aren't the double trigger variety. They have been getting taxed at just time vest. It's not waiting for the future IPO to all become taxable. So when looking at SpaceX employees' priority of sales, you know, RSUs actually will show a cost basis because taxes have already been assessed on what has vested. Okay. So you're saying SpaceX employee has stock that has been, that is vested. They pay their ordinary income. They own that. And there's presumably another large capital game between what they held and what is going to be available in the IPO. And that's going to be either short term or long term capital gain, depending on when their RSCs. is vested, and that will change the order of operations that I went through in my example. And I misstated that.

I didn't misstate, but I didn't acknowledge that the RSUs had vested, and there might be another capital gain, which does not make it quite as easy as just sell everything because there's no gain. Yeah, exactly. But there are other, I mean, commonly at other private companies, it would be the RSUs just kind of sit around and then at IPO, they're all taxable at Vest. I don't consider, after they vested, they're just shares. They're no longer RSUs.

That's true. I guess that's an important distinction. So after you've received the shares from RSUs, they're not really vested RSUs. They're just shares of the company's stock. I do want to check on one thing with, I don't know if your vibe coded calculator. I haven't checked the formulas on it. But I am curious with long-term capital gains, it's important to understand how they work in conjunction with ordinary income. I'm sure you're aware, but maybe this is news to some listeners that capital gains will float on top of whatever ordinary income you already have for the year. So say, for example, you have a salary of 200K, assuming no deductions or whatever, you will immediately in the long-term capital gains tax bracket, rather than starting at zero, you'll be plopped in right at 200K. So I think that's how you have it. I specifically engineered it to have the capital gains stack on top of the ordinary. Yeah, so that's great. And when we think about the planning, if that was step number three that you had in yours, that's why that's kind of an important step, is projecting your income because some people mistakenly think that the first X amount of dollars

of long-term capital gains is zero. But if you have other income, that's not the case. And so, I mean, your calculator is helpful for that. One thing that I like to talk to clients about, when we try to determine your ideal portfolio, I don't know if that's the exact language you use, but that's one bullet that is like, that itself is like, I mean, there needs to be a whole separate thing on how the heck do we determine your ideal portfolio. But that's, I guess, our job. But In terms of how you start to figure out an ideal portfolio, the way I like to frame this kind of investment decision of what to do with a concentrated stock is there's a difference between concentration and reliance. I don't know if I hear people talk about this a ton, but you can be extremely concentrated in the stock and not reliant upon it at all for your financial goals. I mean, a really extreme example would be, say I have $100 million of SpaceX, but I have $10 million of money outside of it.

Depending on what your lifestyle might look like, you may not be risking anything by letting it right on SpaceX. Now, if you contrast that to somebody who has, say, they have 500K of SpaceX and a $500,000 net worth, they're basically entirely reliant upon SpaceX. And so depending on the person, it's really important to figure out just how reliant are you upon whatever individual stock that you might own. So that's where it's helpful to have a rough plan or rough projection. I mean, the fire crowd is really good at running early retirement projections. For people in the fire crowd, I like saying, okay, what do you look like without your concentrated position? How much do you need to extract from that position to make sure your fire plans are kind of shored up and are solid?

I really like your plan, Scott. I mean, what I like about it the most is that you have a written plan. And so as the market volatility, you know, does its thing, you're going to go back to your foundational plan and execute on that. The way I think about your step three, and we've talked about this throughout, is you figure out in your earlier steps how much cash you want to generate for the year, which translates to this percentage of my portfolio that I want to sell, right? And then my step three, the reality is that your portfolio is in a bunch of different buckets. So maybe you only have the RSU bucket. And then it's super simple. You're just going to

to sell the RSUs that vest, right? Basically, after that vest happens, then those shares are essentially in your tax-free bucket. And so that's where you're going to pull from first. And then you're going to look to your long-term capital gain bucket, right? The other thing, you know how this works, but your average listener out there, when you say cliffs, sometimes people think of a cliff as if they go over it, it's like catastrophic, right? Really, it's just the marginal dollar normally that is going to get taxed at the higher rate. So you got a written plan. You're much, much better prepared to execute against that than if you're just, you know, don't have a plan. You're talking to your coworkers in the cubicle next to you, watching the market every day.

That's where you can get into some real trouble. Yeah, do people have cubicles anymore? Have we gone back to cubicles or are we still on like the open? Are we back to them? I don't know. Open architecture and then back to cubicles. I used to have a cubicle way back in call center days during college, you know, that was fun. So some people, Scott and Mindy, they're actually forced to have a plan.

It's called a 10b-5-1 plan. So if you're considered a company insider, you know, there's blackout windows, right? Which is basically nobody in the company is allowed to sell or do anything during these windows because we've all got material non-public information, I think it's called, right? And some people, they're sort of considered to be under suspicion like all the time, right? Because they always have access to something. And so they will be heavily encouraged by legal, you know, general. council normally for the company to implement a 10b-5-1 plan, which is basically just a systematic

plan of selling. So you just instruct your broker, according to this documented plan, I want to sell my RSUs as they vest. In addition to that, I want to sell a thousand shares, you know, on the first Monday of every month. It could be all kinds of random instructions in there. The point is that it's recorded and so no one can accuse you of trading on non-public information because you set this plan up and you put it in place and now it's just happening. I encourage people to, you don't have to get that strict about it, but kind of think of yourself in that way

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Application times can vary and rates may vary. Who's the somebody that I'm talking to? Am I talking to a tax planner? Am I talking to a CPA? Am I talking to a financial planner? We're talking to CJ. Yeah, you're welcome to obviously, you know, shameless plug. But yeah, I mean, we help people figure out the financial planning, the tax planning.

I mean, when you think about how to map out the most tax efficient shares for you to sell, for any given IPO or any given public company, that's a shared. sheet that we usually have with our clients of, this is the order of stock we need to sell through, and this is what's the most tax efficient. This is the tax per share that you're going to be paying for each given type of equity you have. That's just one piece of your plan, Scott. I mean, we have our own similar process, but yeah. Whether you're talking to one person or multiple people, multiple firms, multiple people within the same firm, you need to have all the skill sets represented. So I'm a CPA. I'm a certified financial planner.

clients when I was practicing, they love the fact that even though I could nerd out on taxes if I wanted, I always started with the big picture. Most clients, they want you to save them taxes, but they don't want to get down into the nitty-gritty detail, right? They want someone that can explain it in practical terms that they can understand and grab onto. It needs to be an integrated approach, whether that's within the same firm or multiple firms. The challenge with multiple firms is just getting everybody to talk, getting all the professionals to communicate. I'm sure you guys have had the challenge of, you know, going to get your estate plan done and then like, well, how do you, now they hand it to you and how do you implement that? So it's nice to have multiple skill sets within one

advisor or one firm that can keep everybody on the same page. It's really fun when you have like your CFP, your lawyer, your tax guy, and you're like, wow, this call is $1,400 an hour right now. We just did it. I don't, want to hear about your freaking weekend. This one, sorry. But yeah, that could always be fun. But it seems to me like you've got to start with the end goal in mind and then think about the tax consequences. And if the numbers get really big, then you're layering in more team members, right?

If you're talking about $25 million situation, now all of a sudden we're talking about estate planning too, because there's a very good probability this estate's going to be way over the estate tax limits, right? The lifetime exemption, yeah. We didn't even touch on that. We're thinking that's another episode or that's another. audience. But yeah, for all of the income tax planning that we talked about, there's multiples of that for estate tax planning and wealth transfer if you're in that boat. When Toby was talking about the

QSBS multiplication, basically all of that is heavily tied with all that estate planning stuff. How do you know if a company that you've invested in qualifies for the QSBS? I wrote some of the OG articles on this, I feel like, but there's hundreds of them out there now. So the Basic requirements are you invest in a domestic C corporation on original acquisition. So in the United States, a C corp, not an LLC or an S corp or partnership, original acquisition. So you can't buy these shares on the secondary market. At the time that you invest, there's old rules and there's new rules.

We'll go with the new rules. The company has to have less than 75 million of net book assets. So not the value of the company, but the actually. accounting assets of the company of the books. It also needs to be not in a prohibited industry. So prohibited industries, think of service companies, a lot of service companies. Think of oil and gas. I think banks are in there. Yeah, financial. They don't tell you what qualifies. They tell you what doesn't. So what does qualify? What types of companies? Almost all your tech companies, all your software, manufacturing companies, those are normally going to qualify.

There's some other nuance, some other requirements, but basically you make your investment. If you hold three years before you sell, and by make your investment, you have to exercise the option or purchase the stock. It can't be an unexercised option. So when we talked earlier about options, it can't just be you receive the ability to buy shares. You literally have to purchase the shares for the QSBSPS clock to store. Or the partnership you invest in, if you invest through a special purpose, vehicle, the partnership can purchase the shares on your behalf, on all of the limited partners' behalf and start the clock. So if you meet these requirements, then why are we jumping through

all these hoops? What's the benefit? Well, if this purchase occurred after July 4th, 2025, after Oba passed, then you're looking at up to $15 million of tax-free federal capital gain. Most states mirror the federal law, and they would also make it state tax-free. Some states like California and a handful of others, they do not accept this, and so they'll just tax you like normal. And so those are the basic rules. I don't know how you acquired whatever private company stock that you have, but you may be sitting on something tax-free. Well, now I have to go do some research. I don't think I am, but boy, would that be awesome.

A couple more practical questions. I know we're going way long here, but this is, I think, very useful stuff here. This is scratching the surface, Scott. I'm pretty sure between the two of us, we could write a couple books on. So I'm looking at your prices here, and for what it's worth, I thought these were fair prices. That's why we were excited to partner with you guys on this. But you charge $800 or $1,600 for advice, an advice session, and $6,000 or $10,000 for a plan, a full financial plan in here. If I'm 26 and I'm joining one of these tech companies and getting my shares, that's a big deal.

I'm reluctant to spend that. But are there mistakes that I'm making at that point when I join the company that I'm going to regret later when I need this? Or is this something that I should really spend the money on when the liquidity event is approaching and I'm about to make a decision to sell or keep at that point? When would you honestly advise the person to talk to somebody that specializes in this? I mean, if this is your first job in tech or something, I wouldn't hire us. I started Equity FTW to educate the people who can't or won't hire a financial advisor who knows stuff. on equity compensation. So if you're brand new to a company first job, yeah, just learn. You know, spend time reading and learning about the specific stuff you have. Even if you don't find it fun,

just spend literally 20 minutes trying to learn. And you'll be in a much better position. So let's say I'm between two companies and I think that they both have very similar prospects, but one is offering a different type of equity than the other. Does that change your assumption there? Is that something that I should really think about at that point? Yeah, that's a great question. The way I'd answer that, Scott, and just getting back to a little bit for why C.J. Started this firm. Some of those fees are one time. Some of those are monthly subscription.

It's a no-brainer decision. If you're somebody who has a larger portfolio, let's call it $2 million plus, that's paying a traditional AUM advisor, starting on kind of the 1% starting club, that is not providing them in addition to the investment management. tax planning, holistic financial planning, estate planning. The firm was started to capture that audience. I don't know how this compares to the Bigger Pockets Money audience, but there's a lot of people out there with a handful of millions of dollars that aren't getting comprehensive advice, that are paying 1%, that are essentially just overpaying.

CJ and I believe that AI is eventually going to come and potentially eat the lunch of those traditional AUM advisors that aren't more comprehensive. But we started this, so we kind of positioned our fees, sort of in between a wealth front that's going to charge you 25 basis points and that traditional advisor. If you run the math, someone with, you know, two, three million bucks, what they would pay that's traditional advisor versus what they get and what they would pay a wealth front, a robo advisor versus what they get. We believe that ours is a very attractive value.

We're excited around that. I was more curious about when to high. hire this professional because if I'm not making a decision, I just join a company and they offer options and there's no real mistake I can make. I would have DIYed it myself for years and did. But when are the decision points in there? And when do you go and get professional advice in your view? In your biased view, of course. Yeah, in my biased view, you know, I think job switches can be a good opportunity to, you know, assess an advisor like us. I mean, I think it really depends. I mean, when you talk about somebody joining a company, I mean, I don't know the level of compensation or like the level of equity at stake, but there are some best practices for negotiating option agreements with companies. That's for sure. So even outside of the typical financial planning, advisors like us and other advisors who know equity comp well would likely be able to provide some opinions, though not legal advice on how to better structure a deal with an employer or prospective employer. If you're on an early stage company in your,

you know, like you said, 26-year-old. If you've got money, read the articles. If you've got questions, talk to somebody like us. If you don't have the money, wait until you start to see the hockey stick, right? So once your valuation, you know, these early stage companies, you're usually pennies on the dollar. Once in 409A valuations are usually quarterly at that point. They start off annually and then they're quarterly. Once you start to see significant bumps in the 409A valuation, which is widely available within the company, that means that compensation element, that option spread is starting to take off. And so that's when you need to do the planning. Because if you let that get too far out ahead of you, you're going to regret it. Whether you miss out

on having tax-free gains in the future or having long-term gap pool gains, usually the ROI on that few thousand dollar investment will be well worth it. But if you're just, at that company, you don't got much money, you're new, and the valuation really isn't changing much, then you haven't lost anything yet. Awesome. And where can people find you guys? Yeah, just the website, equityftw.com. I'm sure you'll share a link.

I even have a specific link for BiggerPockets Money people that they can check out. If it's easier, biggerpocketsmoney.com slash equity will also take you right there to equity at dw.com. So go check that out. And yeah, we think, you know, we were really impressed with CJ and Toby and their knowledge on this. And that's why we're excited to partner with you guys. And for the folks that have this very good, specialized niche problem in the space,

which I think is a lot of people at SpaceX right now. Yeah. SpaceX, Anthropic. I feel like it's kind of a crazy time we're in. I feel like it's a crazy time. And we are talking to people who, like, I'm not concerned about the executives at these companies. I'm concerned with the people who have just been, you know, plugging away, doing their

thing and then all of a sudden they are multi-millionaires, I don't want them to make a mistake. I mean, the more money you have, the more consequential mistakes are and the more consequential the opportunities are too. I mean, even just little things. Like in California, a big thing is making sure cash is properly parked where it should be. Even that can be the difference of, you know, $10,000 per year in additional interest by doing that correctly. I don't want to lose out on $10,000 a year in interest just because I put it in the wrong spot. Well, CJ and Toby, thank you guys so much for coming on and sharing your wisdom here. We really appreciate it. We'll see if there's any follow-up questions from this on the YouTube channel or anywhere else where folks are listening.

And yeah, we really appreciate it and look forward to staying in touch. Awesome. We appreciate it too. Like I said before, just scratching the surface. If there's any other topics you want to drill down on further in the future, we're happy to oblige. Oh, there will be. Thank you, Scott. Thank you, Mindy. Thank you, CJ. Thank you, Toby. We'll talk to you soon. All right. See you. Okay, Scott, that was CJ and Toby from Equity for the Win. There was a lot of information we got from them. I now have a lot of rabbit holes to go dive down. And I know once I dive down those rabbit holes, we're going to have to have CJ and Toby back to kind of explain them a little bit more. Did anything surprise you during that show? I would say yes and no. It's the surprising thing is just how complex it is. And the terminology that you need to have here and the decisions that you need to get right. But it sounded like at the highest level that they had agreed with the general framework that I had proposed there.

And I think that the hardest part of this is the alignment of, no, I'm not going to stay invested this heavily in one company's stock unless there's a good reason for it or I'm not dependent on the position in there. And I think that's probably the hardest emotional part of this, that really they have to deal with a lot. And that's maybe that's a big part of the value as well of talking to somebody who's experience with this is, you know, it always feels like your company's going to win. Maybe it will from here. And you're going to miss out on a big time basis. There's also plenty of people who

lost. And, you know, you only have to get rich once. And if that's something to be said for that and thinking about how that's going to impact what you're going to do when you do have one of these big windfalls. Yeah. Well, I mean, you can get rich once and then lose it all and get rich again. Well, then you have to get rich twice. Yeah. You just really want to get rich that one time and keep as much of it as you can. I mean, you are the one who put in the work at the company that may or may not have gone public. And once they went public, now you've got this liquidity. You really want to be able to keep as much as you can. And I can see a lot of people just making mistakes because they don't know what they don't know. And that's why we wanted to bring CJ and Toby on to discuss the

different things that could happen if you sold your stock at different times. If you had different types of stock to sell, et cetera. And we didn't even get to things like lock up periods. And and, you know, when the liquidity options are going to be there for various folks. We didn't talk about the potential pressure inside some of these companies, I don't know, to remain a major shareholder, you know, in order to show allegiance or buy-in to the business. So there's a whole bunch of other factors, I'm sure, that play into this decision, and this is only scratching the surface. But I love it because it's a very good problem.

It's a hard problem. The stakes are very high. And in many cases, in probably most cases, for a lot of these folks that are having windfall, like in a SpaceX, this is the first time and maybe the only time in their career, they're going to have a windfall like this. And so it's really important to play that hand right because this is a very high stakes and maybe once in a lifetime, maybe once in a generation opportunity for you. Yes. So make sure that you're handling it properly. And the best way to handle it properly is with guidance from somebody who knows what they're talking about. Scott and I are really

excited for you, but we are not qualified to tell you how to do this properly. That's why we brought C.J. and Toby on. Scott, before. we go, I want you to share where we can find that income tax resource that you were talking about during this episode. Yeah, you just go to biggerpocketsmoney.com and you go to the resources tab on there. And the right there is going to be a tax projection app. And that's what I've got there. And, you know, I've checked it a few times, but there's probably some situation in some of the states. There's a couple of simplifications in there. But hopefully it's useful as a tool in getting you a ballpark to estimate this at the beginning of the journey, but you can't rely on it. It's a vibe coded app I built. to hopefully be a little helpful. You can check that out at biggerpocketsmoney.com slash income dash tax dash projection, or you can navigate there in the navbar. And then if you want to talk to CJ and Toby,

you can go check out biggerpocketsmoney.com slash equity or equity ftw.com. And that's where you can find those guys. All right. Scott, thank you so much for wrapping that up. I know that you have been working very hard on that. And I wanted to make sure people knew where they could find it, because that looks like something that you can spend a lot of time playing with and having a lot of fun with. Again, for entertainment purposes only, but it gives you a great starting point. You can see how residency in different states can have a big impact on your tax bill.

Okay, again, before we go, I want to direct you to our website where you can find the even more financial independence information. There's tons of resources, calculators, forms, like the goal setting worksheet that I discussed earlier, to help you on your path to financial independence. Biggerpocketsmoney.com. All right, Scott, should we to get out of here? Let's do it. That wraps up this episode of the Bigger Puckets Money podcast. We will see you on Friday. He is Scott Trench. I am Indy Jensen saying stay cool, Mule. You know how the change in seasons hits and suddenly you just want to declutter the garage, clean out the closets, and get everything all organized? That same feeling hits me with my finances every spring. I used to have accounts scattered everywhere, making it hard to stay on track with my money goals.

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