What Should You Do If You Have Too Much Company Stock Transcript:
Hi, I’m Tom lo from Vested Financial Planning and I’m here to answer the question “What do I do if I have too much company stock?” So, in four 4 steps
Step 1: is to identify if you have any short-term valid cash needs. This would be things like funding an emergency fund or saving for a downpayment. Go ahead sell the stock. Take the cash off the table and use it for those short-term needs. Short term I define as anything less than 3 years.
Step 2: decide if you want to hold any of your company stock for the long term. So if you’re a big believer in the company, you think it has a bright future then go ahead and hold on to some. I recommend to at most hold on to 5-10% of holdings but whatever you decide on just take it and set it aside.
Step 3: take your remaining shares and sell it. Now there are a couple of ways to do this, One is to sell it immediately, just sell everything there are some studies that say this may make the most sense and it’s very simple. Second, is that you sell on a schedule so what you do is you could say, “I will sell 1/4 of my holdings every quarter of the next four quarters and the benefits are you don’t pick a single wrong day to sell at a low point. If the stock goes up you can capture some of the upside and you have more control of the taxes, you can have taxes over a couple of years rather than a single tax year.
Step 4: is to take those proceeds tax reserve and invest some of the remaining proceeds in a broadly diversified portfolio. So that’s how you reduce your concentration if you want to learn more contact me here.
After 20 years working for companies including eBay, Yahoo!, Intuit, and startups, I made a career change into the financial world as a fee-only financial planner 9 years ago. I earned my CFP®, spent a few years at a boutique fee-only firm in San Jose, worked 2 1/2 years at a leading wealth management firm in San Francisco, and then left to build the firm I wish had existed when I was working as a tech professional.
My mission is to help other Silicon Valley professionals make the most of their employee equity to help them reach their financial goals.
