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Do More With Your Money


Oct 19, 2020

One of the most common windfalls of wealth can come from employee equity compensation. Often, this happens when you’ve worked at a private company that experiences an Initial Public Offering (IPO), and the share price appreciates dramatically once it enters the publically traded market. However, you can also experience a windfall with a publically traded stock that experiences a dramatic rise causing your stock options (or equity position) to represent a large portion of your investment assets.

You can analyze many factors in whether or not to diversify your stock position. I’ll be primarily discussing incentive stock options (ISOs), but many factors for determining diversifying can apply to any concentrated stock position.

The overall message you should remind yourself is that “concentration builds wealth and diversification maintains wealth.” The decision to diversify should be based on your long term financial plan. Let’s discuss it!