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Investment Planning |
Planning for the Unexpected: Company Stock
Our clients who hold a large portion of their wealth in stock, stock options, and other equity awards from their employers are encouraged to diversify and limit equity holdings to no more than 5% to 10% of investable net worth. As the March 11 tragedy in Japan has demonstrated, unforeseen events can cause a poorly constructed investment plan to implode overnight.
For instance, an Apple employee who had a net worth of $2 million in February 2011 would have a much lower net worth today, as news of the supply chain disruption of the iPhone, iPad, and other consumer products has dampened the strength of Apple's stock price. With our help, this Apple employee would have diversified his concentrated equity position and protected his overall wealth. Since he relies on Apple for his family's health insurance, his salary, and ongoing 401(k) contributions, loading up and betting on the company's stock performance further damages his plan when the unexpected happens.
Want to help your friends and family diversify? Want to help your colleagues who have a concentrated position in one stock? Simply pass along our contact information.
Tips Disclaimer
These tips contain information that may change over time as a result of new tax legislation. Although we make efforts to keep this information current, you should check with your tax advisor before taking action based upon any information contained in these tips.