Re-investing Stocks to Increase Profit | Pinoy Technologies

Stock options can be an excellent investment, especially if your employer uses stock option grants to reward worker excellence. Even so, it is important for workers who do receive stock option grants to diversify their capitals from period of time. Several workers end up with a large stake in their company?s stock and that lack of diversification puts them at risk in the event the firm?s fortunes turn sour. Compelling the time to diversify your holdings by selling your stock options and reinvesting the funds can limit your exposure and your tax bill.

Six Guidelines:

1. Evaluate your potential capital gains by comparing the strike price of the stock option to the current selling price. For instance, if the strike price, i.e., the price you pay to buy the stock, is $10 and the existing selling price is $20; your potential capital gain would be $10 per share. Increase this $10 by the number of stock options you own to arrive at your potential capital advance.

2.?Communicate the brokerage firm that holds your stock options and inform them that you want to sell your options. Ask the company to either transfer the funds to your main brokerage account or send you a payment.

3.?Save the tax funds in a safe vehicle like a savings account or money market fund. This will ensure that the money is there when you need it to pay your duties.

4.?Choose what type of investment you want to diversify into. If you want to decrease the risks associated with investing in a only stock, consider reinvesting your stock option profits into government bonds or a certificate of deposit from your group.

5.?Usual money aside for the taxes you may owe. Using commercial tax preparation software set is one of the best ways to estimate your money gains liability. If you take not to use such a program, set aside one third of the proceeds from the stock option sale for taxes just to be on the safe side. Any money left over can be reinvested after you file your duties.

6.?Contact the mutual fund company where you will be placing your stock option proceeds. Teach the company to purchase the funds you wish to invest in. If you idea to purchase a bank CD, take the check from the proceeds of the stock option grant to the bank with you.

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Source: http://www.pinoytechnologies.com/re-investing-stocks-to-increase-profit/

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