Client Snapshot
- Client: 32-year-old hardware engineer and NVIDIA employee
- Family: Married and planning to have one child
- Net Worth Concentration: 87% in NVIDIA stock
- Equity Holdings: $17 million in NVIDIA RSUs and ESPP shares
- Primary Goals: Buy a home, save for college for one child, and make work optional for both spouses
- Key Challenges: Significant concentration in NVIDIA stock, managing the emotional aspects of selling, and minimizing taxes
- Planning Focus: Stock compensation planning, tax planning, investment diversification, and making work optional
The Client’s Goals
Raj and Maya wanted to turn their significant NVIDIA stock holdings into long-term financial flexibility while still allowing Raj to continue working if he chose to. Their primary goals were to:
- Buy a home: Sell enough NVIDIA stock to purchase their dream home.
- Save for college: Set aside enough money to cover college costs for the one child they planned to have..
- Make work optional: Determine how much they needed to diversify from NVIDIA to reach financial independence and no longer depend on employment income.
- Diversify their wealth: Reduce their reliance on NVIDIA stock and build a broadly diversified portfolio.
- Minimize taxes: Minimize taxes by using tax strategies and spreading the tax impact of selling their NVIDIA shares over multiple years rather than creating an unnecessarily large tax bill in a single year.
- Reduce emotional decision-making: Follow a predetermined selling strategy rather than making decisions based on short-term movements in NVIDIA’s stock price.
My client, Raj, was a 32-year-old hardware engineer who had worked at NVIDIA for more than a decade and owned $17M of NVDA RSUs and ESPP shares. He wanted to make work optional, which meant that he could choose to keep working as long as he wanted, but he didn’t have to work to pay his bills.
First, I helped Raj and his wife Maya determine how concentrated they were in NVDA. After running the numbers, we calculated that they were highly concentrated, at 87% in NVDA.
Second, I helped Raj and Maya figure out that their goals included buying a house, having and raising one child, and their primary goal of making work optional for both of them as soon as possible. Next, we developed a financial plan to help them know how much they needed to get out of their NVDA to make work optional.
Third, we built a selling plan to diversify out of NVDA into a broadly diversified portfolio that would get them to financial independence. We developed a plan that would help minimize their emotions and spread their tax bill over multiple years. We followed the thoughtful and intentional selling plan that minimized taxes over a two-year period and sold enough NVDA to buy a house, save enough to cover college for the one child they planned to have, and make work optional for both of them.
Raj and Maya bought their dream house, saved enough for college, and made work optional. Raj continues to work at Nvidia because he loves his work but knows that he can choose to leave at any time for any reason. He also knows that he can achieve his other financial goals over the long run no matter what happens to the NVDA stock price.
Why This Approach Made Sense
With 87% of Raj and Maya’s net worth concentrated in NVIDIA stock, their ability to achieve their financial goals was closely tied to the future performance of a single company. Rather than trying to predict where NVDA would go next, we focused on how much they needed to diversify to make their goals achievable.
We developed a thoughtful selling strategy that minimized the tax impact over multiple years while providing a clear framework for reducing their concentration. The strategy also helped take emotion out of individual selling decisions by establishing in advance how much NVDA to sell and how to reinvest the proceeds.
The Outcome
Over a two-year period, Raj and Maya sold enough NVIDIA stock to fund their most important financial goals. They purchased their dream home, saved enough to cover college for the one child they planned to have,, and reached a point where work became optional for both of them.
Raj continues to work at NVIDIA because he enjoys his work, but he no longer needs his paycheck to support the family’s financial goals. He and Maya also have a diversified portfolio that is designed to support their long-term financial independence no matter what happens to the NVIDIA stock price.
Disclaimer:
This is a hypothetical illustration used to demonstrate financial planning concepts. Although it combines the experiences of actual clients, it does not constitute a testimonial or endorsement. Hypothetical financial planning illustrations have inherent limitations, including that they are prepared with the benefit of hindsight, and they do not reflect the actual results of any specific client situation.
