The Malcolm On Money Guide to Restricted Stock Units

From a financial planning perspective, there is nothing magical that happens once an individual or couple breaches the $1,000,000 mark with respect to their gross income. There is no special million-dollar tax bracket, nor does the IRS suddenly hand you a different rulebook once the first seven-figure W-2 arrives. 

In fact, by the time someone earns $1 million in one calendar year, they have already crossed most of the income thresholds that materially affect their taxes. However, for senior leaders who reach this level of compensation, the basic rules of personal finance start to change entirely.

Investing used to be simple. All you needed to do was buy good companies, add to them over time, ignore the noise, and allow the laws of compounding to do the rest. Now, although none of those principles has stopped working, following them has gotten a lot harder. 

Prediction markets, sports betting, and crypto have all exploded in popularity over just a few short years, and the ability to access such speculative bets has been lumped in with traditional financial instruments like stocks. When this sort of risk-taking behavior is normalized and seen as a sustainable long-term strategy, it inevitably begins to spill over into traditional financial markets.

The savviest investors know that they are not supposed to buy a stock simply because it has gone up a lot and that last year’s winner will not necessarily be this year’s. By the time a particular investment has become the subject of podcast conversations and social-media posts, all the easy money has likely already been made.

That said, every market cycle produces the same behavior. A stock begins rising enough to attract some attention. Analysts trip over themselves to be the first to increase their price targets. Media coverage of the company and its CEO expands. Finfluencers, who happened to have bought the stock early begin posting extraordinary gains online. And eventually, people who had no interest in the company just six months earlier suddenly become convinced that they are missing out on the next big thing.

Spend enough time in online investing circles, and you will encounter portfolios that read less like well-researched investment themes and more like multi-game parlays. Individual investors are layering 2x levered single-stock ETFs tied to Korean memory chip manufacturers on top of 3x levered semiconductor index funds that are all housed within the same brokerage account, often purchased on margin. 

And to be fair, for a time, it works. Momentum has a way of validating behavior that would otherwise seem reckless. But what seasoned investors know is that these types of flashy trades have a way of working, right up until the moment they don’t. The same leverage and concentration that amplify gains on the way up tend to accelerate losses just as quickly when sentiment shifts. And by the time that shift becomes obvious, it’s usually too late for the investors who jumped in last.

An increasing number of retirees are confronting an unexpected reality. What was not obvious during their working years—even if they were high earners throughout much of their career—often becomes clear in their 70s or 80s: that they may have saved far more for retirement than they are likely to spend over the remainder of their lives.  

For decades, the dominant narrative in personal finance has been one of scarcity. Investors have been inundated with messaging designed to evoke anxiety and uncertainty, prompting questions such as, “Will I have enough?”, “Will my portfolio last?”, and “Should I be saving more?” Today, however, a growing number of retirees are confronting a very different question: “How much is too much?” 

There’s a moment that tends to catch even the most financially sophisticated executives off guard. It doesn’t usually happen when the first equity grant vests, nor when the stock doubles or triples. It happens years later when you finally realize that what once felt like a modest equity award has quietly grown into a multi-million-dollar position. 

At that point, the question is no longer how much higher the stock might climb, but how much of your financial future should remain exposed to the fortunes of a single company. That question becomes especially important when the market is in a frenzy, valuations are elevated, and market leadership is narrow, as is the case today. While selling shares outright may be restricted, tax-inefficient, or emotionally difficult, options can provide another path.

The days following a major Initial Public Offering (IPO) are often characterized as first-day pops, valuation milestones, and trading volume. But for the employees and early stakeholders, the experience is far more personal. 

When SpaceX officially went public, it did not just mark the largest and most anticipated IPO of all time. It also helped make an estimated 4,000 current and former employees bona fide millionaires. But what tends to get far less attention is the set of difficult decisions that follow. 

For high-income earners who routinely receive large bonuses, have significant RSU vesting events, or experience a once in a lifetime liquidity event such as an IPO, few tax strategies generate more attention and confusion online than the so-called "short-term rental loophole.” This loophole allows bona fide real estate investors to use losses generated by a short-term rental property to offset ordinary income. 

The strategy can sound almost too good to be true. In some cases, it is; but in other cases, the short-term rental loophole can be a powerful planning opportunity. The key is understanding what it actually does, who it is designed for, and why the greatest benefit may not be reducing taxes presently but rather creating an opportunity to reposition wealth more tax-efficiently for decades to come.

The world’s largest technology companies—Alphabet, Microsoft, Amazon, along with Meta Platforms—are widely perceived to be spending at unprecedented levels to secure their positions in what many believe will be the defining technological shift of the next decade. Nevertheless, there is a narrative forming around the artificial intelligence (AI) arms race that seems incomplete. 

The assumption—reinforced almost daily by headlines and prepared statements on quarterly earnings calls—is that nearly all this capital is being funneled into the infrastructure needed to power increasingly complex AI workloads. But buried within the financial statements is the sobering reality that a meaningful portion of the capital currently being raised isn’t going toward AI infrastructure at all. Instead, it’s going to the IRS.

A stock market bubble is best defined as an episode of rapid price appreciation, followed by an equally dramatic decline. While these moments are often framed as anomalies, they are actually recurring features of the system. And while each cycle is assigned its own narrative, the underlying mechanics tend to look strikingly similar. 

Boom. Bust. Repeat. This is the rhythm of financial markets, tending to become most visible only in hindsight. Understanding that rhythm won’t allow you to predict the exact peak or trough. But it does offer context for recognizing where you might be in the cycle, which is arguably more valuable.