How to Best Diversify a Concentrated Stock Holding

Scott and James discuss how to best diversify a concentrated stock holding.

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Listener Question: How do I exit a concentrated stock position?

I’m an employee at a large tech company and I’ve vested RSUs over the last 4 years. Some of my stock has appreciated 4x since I was granted it. My non-company stock brokerage account value is around $700k, and on top of that my vested company stock (APPL) is worth $250k at the moment. I expect to continue to accumulate more company stock through ESPP and RSU grants over time. My current gross income is around $325k ($200k salary + $125k annual RSU stock grants). I would like to take action to diversify this position into other equities (equity index funds). The reason I would like to diversify is to reduce my portfolio risk. Having just seen some other companies like Meta take a 70% stock hit, it feels like a responsible action to take. As I’ve heard in your podcast, I should not have too much of my net worth in one stock, and the only free lunch is diversification. I can sell all $250,000 vested shares tomorrow, but then I believe I would get hit with a large tax bill for all of the gains, which seems like it could be a burden. I am thinking I could start by selling the shares that I’ve held for over a year to make sure to get the long-term gains tax rate instead of the short term tax rate. And then next year, I could sell the stock I got this year, etc. I am thinking of starting a DAF in the next couple years and gifting $10k of appreciated stock to charity (apple does 2:1 promotions where they match up to $10k, meaning I could initiate the DAF with $30k), but the rest I would like to re-invest in a more diverse way to meet my short and long-term financial goals.  Planning Points DiscussedUtilizing Time EfficientlyCapital AppreciationPurchasing PowerOther issues (IRAs, Inflation, Financial Goals, etc.)Timestamps: 2:30 - We're on YouTube HERE! 5:58 - Tax Consequences 9:16 - Stock Vesting 13:45 - Minimize Your Taxes 16:56 - Best Stocks 25:30 - Aligning Your Financial Goals LET'S CONNECT! James YouTube LinkedIn Website Scott Facebook Twitter Website ENJOY THE SHOW? Don’t miss an episode, subscribe via iTunes, Stitcher, Spotify, or Google Play. Submit Your Question For The Show Here!