I wonder how stock options play into this. Assuming you have generous stock options in a thriving company, wouldn’t it be worth it to stick out 3-4 years for a majority of that equity?
Take the pay increase vs the equity every time. Plus by changing 5 times, I diversified my equity on more companies and ensured something hit at least a little.
Not taking RSU’s in these tech companies is a very bad idea financially, I like to think of it as equivalent cash. You can always sell your RSU immediately to get cash. But another advantage is when you individually invest in stocks, you rarely have a large fund into 1 stock, you probably diversify into index funds. This gives you consistent returns but leaves no shot at making a fortune. In my experience RSU’s as by default are fully invested into the 1 company you’re working for, give you that outsized return opportunity. Just ask employees at snowflake, NVIDIA, Tesla. Heck even MSFT RSU’s have doubled in value every couple of years and Amazon had insane growth from 2010 to 2022, where if you had gotten equivalent in cash you would be more than 10 times poorer than someone who just held Amazon RSU’s. Yes putting large amounts in 1 stock is risky, but not nearly as risky as you make it sound to be.
This is not true at all. My current company is privately held and has RSUs. Over the last two years there has been a single buyback and it was at a fixed closed market price and we were limited to selling 10% of our vested RSUs. Lots of startups flipped to RSUs with no plan to go public or be bought out in the last few years.
Additionally, even if your company is stable RSUs are frought with issues like what happened two orgs ago where a blackout period started and our stock went into a 30% free fall during the blackout and never recovered. We ended up getting a tender offer, the company sold to private equity and unvested shares were clawed back
Yeah I’d agree for a more risky venture, cash is better (unless you are in a gambling mood), I’d disagree that being true for FAANG or any of the 100 billion + tech companies (Airbnb, Uber, snowflake, Palo Alto networks etc)
Never put your savings into the stock of the company you work for. If (as happens) the company goes bankrupt you can be out of a job and all your savings at the same time. The only exception is if you have reason to believe you will be CXX - at that level (or one below in some cases) your stock owners is published to shareholders and they look for high levels to show you have your personal wealth on the line for the company - and you also have enough power to do something about it. (most of us don't have enough power for anyone to care what we think). Stock options are the same as any other stock: don't put your net worth into it.
I have long ago learned that until the money is in my bank account it isn't mine. Sometimes the promised $$$ arrives, sometimes it does not. But always I want to see the money.
I would rather have some options in several companies than a lot of options in one to increase the chance that some of them will be valuable. That approach does require you to buy the options, whereas staying at one company means you can delay the purchase
If all the companies you work for have similar likelihood of doing exceptionally well, you've paid 4 years and gotten either one lottery ticket worth X (strategy 1) or 2-4 lottery tickets each worth 50%-25% of X. When you don't already have "enough" money, 25% of X is still life-changing, and if you can get 2-4 shots at it instead of 1, that can be a very workable strategy.