A lot of your wealth came from one great investment. Now what?
A successful business, company stock or another concentrated investment may be the reason you built significant wealth in the first place. That doesn't automatically mean you should sell it.
It means we should understand what happens if you do, what happens if you don't and what options exist in between.
Explore Your Options →Concentration isn't automatically a problem.
You may have built a business for 25 years. You may have held company stock through enormous growth. You may have inherited an investment you don't want to sell.
Good. Then let's not begin by assuming you have to.
I don't think a pie chart gets to make this decision for you. Instead, I want to understand why you own it, what selling would mean, what keeping it exposes you to, what the tax consequences could be and how much of your financial future depends on this one asset.
If one asset represents $4 million of a $5 million net worth, the question isn't simply whether 80% is “too much.”
The better question is what happens to everything else you want to accomplish if that $4 million becomes $3 million, $2 million or $1 million.
The goal isn't simply to own less. It's to make the concentration intentional.
I don't think a pie chart gets to make this decision for you.
Traditional portfolio analysis can identify concentration. It can't decide what matters most to you.
My job isn't to win an argument with you about diversification. My job is to show you what the concentration means, what your alternatives are and what happens under different scenarios. Then you can make an informed decision.
I have too much company stock. What should I do?
02Should I sell my company stock?
03How much of my net worth should be in one stock?
04What is NUA and when should I consider it?
05How can I diversify a concentrated stock position without selling everything at once?
06How do taxes affect selling a large stock position?
07Should I donate appreciated stock instead of cash?
08My business represents most of my net worth. Is that a problem?
You don't need someone to tell you, “Sell the stock.”
You need to understand what happens if you do, what happens if you don't and what options exist in between.
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