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What are vested and unvested stocks?

18th January 2021 Print

When investing in stocks it is important to know the kind of stock you are investing in as well as the impact that this can have in terms of long term investment. But what about vested stock from the company you are currently working for. In this article, we will be providing you with insight into what vested stocks are and whether or not they are worth taking up. 

What Is An Unvested Stock?

Any unvested stock is a stock that is available to customers which may have certain conditions available. These stocks typically have certain conditions that have to be met for these stocks to be assigned to you. This is the most common form of stock that are available on the market making it the most common form of investment at this time especially when it comes to investing in stocks of specific businesses. 

What Is Stock Vesting? 

Stock vesting is earning an asset like a stock or an employer-matched contribution. This is often used to encourage employees to stay longer at a company as these assets are likely to rise in price the longer that they are with the company. Stock vesting refers to the full ownership of a financial instrument being transferred to an owner and is a process that will work much like a bonus for the festive season as this is likely to go up in price as the company continues to increase in value as they grow. This is ideal for small business owners or those looking to begin investing in the consumer sector as this can be worth more in the long term. 

Why Would Business Vest Stock?

A business would think of vesting is stock for their employees to keep them there for longer. With a stock that will be added to throughout the years of service, this could be an incentive to encourage them to stay longer, this can either be kept when moving to another job or can be cashed in to make for a nice payment when moving to another job, this is a great way of making sure that you are using stocks in your business as profitable as possible for employees. 

Does It Change The Value Of The Stock? 

The simple answer is no, the value of the stock is not affected by being vested, therefore it is important to make sure that if your business is choosing to vest their stock for customers that it thinks about the stock they are providing to their customers. This can be a time-consuming process; however, it is a great way of making your employees feel valued like they would not have before. By taking the time to invest in this process, you are bettering your business in the long term.

With this in mind, there are several reasons why your business may want to begin vesting their stock just to give employees a much better experience as well as an incentive to remain in the company for prolonged periods. Where will your business be starting with their stocks?