<prompt> Human: I am eligible for a bonus each year that includes a stock portion. When I have received this, I havent done anything with it. Some stock is sold off for taxes though. I have been reading a lot about the power of index funds and was thinking of selling my stock and then sending the money to my Vanguard account. Does this make sense? or is there some tax problem that I am missing?  <response>: Generally, the answer is yes.Think about it this way: If your company had given you your bonus entirely in cash, would you have used a chunk of it to buy stock in your company? Alternatively, why didnt you use the _other_ portion of your bonus to buy more company stock?If youre not a C-level executive, choosing not to sell stock-based compensation as soon as possible is usually a result of the endowment effect and not a rational financial decision. On top of that, even without the stock, you already have a large financial stake in your employer by virtue of the fact that you would become unemployed if they went out of business. So dont double-down on that; diversify.The only tax implication to worry about is capital gains tax. You will owe tax on the difference between the value of the stock when you were given it and the value when you sell it. Capital gains tax is lower if you have held the stock for over one year. So its best either to sell immediately after receiving when there are no gains to tax, or to hold it for one year if it is rising in value. If you have stock that has increased in value significantly over the past several months, it might make sense to hold on to it until it becomes a long-term gain. 