Overloaded on Company Stock? Why Diversification Isn’t Just a Buzzword

You’ve worked hard. Maybe you’ve been with your company for years, climbed the ladder, and as a reward, you’ve stacked up a ton of company stock—through options, ESPPs, RSUs, or plain old investing. That’s awesome, right?

Well... yes and no.

Having a large portion of your net worth tied up in your employer’s stock might feel like a vote of confidence, but it could also be a hidden risk you’re not seeing clearly.

Let’s talk about why putting all your eggs in one company basket—especially your own—can be more dangerous than you think (and what to do about it).

1. Double Trouble: Income + Investment Tied to One Source

Here’s the reality: If the company stumbles, you could lose your paycheck and your portfolio value at the same time.

That’s not diversification—that’s dependency.

Reminder: Risk management isn’t just for Wall Street. If 40%+ of your wealth is tied to a single stock (or worse, a single employer), it’s time to rebalance.

2. Emotional Attachment Clouds Judgment

When it’s your company, it’s easy to think:

“We’re different. We’re growing. This stock is going to the moon!”

But loyalty and optimism aren’t investment strategies. 

The truth is even great companies go through downturns. The question is: can you afford to ride out a dip when your retirement hinges on this stock?

3. Tax Traps and Planning Opportunities

Selling stock may mean capital gains—but holding too long could mean bigger problems.

Smart planning around:

• RSU vesting schedules

• Long-term vs. short-term capital gains

• Net unrealized appreciation (NUA) in retirement accounts

  
  

...can save you thousands in taxes, but it requires strategy, not procrastination.

Tip: Start tracking cost basis and talk with a tax pro before executing big sales.

4. Diversification Doesn’t Mean Dumping Everything

Worried about sending the wrong message or looking disloyal? You’re not alone.

Many executives and long-term employees hesitate to diversify because they fear it’ll seem like they’ve lost faith in the company.

But here’s the thing: Diversification isn’t disloyalty. It’s financial maturity.

You can:

• Sell gradually over time (e.g., a 10b5-1 plan)

• Use charitable giving strategies (donate appreciated shares)

• Hedge with options or other instruments (for advanced cases)

5. A Clear Path to Balance and Growth

Managing a concentrated stock position isn’t about panic—it’s about planning.

A good advisor can help you: 

✅ Build a sell strategy aligned with tax efficiency 

✅ Reinvest into a well-balanced, goal-oriented portfolio 

✅ Minimize risk without abandoning opportunity

Final Word: Your Financial Health > One Stock

Yes, it’s amazing to have built wealth through your company. But your future shouldn’t rest entirely on its stock price.

If you’ve got too much of a good thing, it may be time to make some smart, strategic shifts—before market swings or unexpected events force your hand.

Ready for a second opinion on your stock-heavy portfolio? Schedule a strategy session at sctaa.com and let’s build something resilient.

It’s your money—let’s treat it that way.