Aussie FIRE | Financial Independence Retire Early 46. Q&A: Employee share schemes, LICs, and mental accounting
Aug 29, 2025
This episode dives into the intricacies of employee share schemes, weighing the benefits of holding versus selling stock. The hosts debate whether listed investment companies are still worthwhile with the rise of ETFs. They also explore mental accounting, revealing how it can deceive us into making poor financial choices. Personal anecdotes illustrate the emotional connections to investments and how rising inflation is shifting consumer habits. Ultimately, the conversation blends practical investment strategies with engaging reflections on money management.
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Sell For Tax And Diversify
- If you receive employer shares, sell enough to cover the tax bill and consider diversifying the rest into ETFs.
- Avoid overconcentration in your employer's stock since your salary already ties you to that company's fate.
Double Exposure Risk Of Employer Stock
- Keeping employer shares magnifies your exposure because your income and investments both depend on one company.
- That leverage creates huge upside if it thrives, but deep downside if it falters.
The 'Would You Invest Cash?' Test
- Ask yourself: would you invest extra cash into your employer's shares right now? If not, sell and reallocate.
- Use that 'Would You Invest Cash?' test to overcome FOMO and inertia.