How Much Company Stock Is Too Much?

Your paycheck already depends on your employer. Your bonus, your career growth, and your health insurance all tie back to the same company. When your investments do too, you’re carrying what’s called single stock concentration risk. It’s more common than you think. Between RSUs, ESPP shares, and stock options, one company can quietly become your entire financial future. So how much company stock is too much? Let’s break it down.

What Single Stock Concentration Risk Actually Means

Concentration risk shows up when one investment makes up too large a share of your total assets. In this case, that investment is your employer’s stock. A common starting point is 10-15% of your net worth in a single stock as a caution zone. Above that, 20% is a level where risk starts to build. The right number for you still depends on your full financial picture, timeline, and comfort with risk.

Some tech employees hold 50%, 70%, even 90% of their net worth in one company. This can happen through RSUs, ESPP shares, and stock options (ISOs or NSOs, depending on your plan) without anyone realizing it.

A bad quarter can hit your income and your portfolio at the same time. Both depend on the same company.

Who This Catches Most Often

This applies to you if you’ve worked at the same tech company for several years. It also applies if you let RSU grants vest without selling. Early employees who hold a large block of shares from stock options fall into this too. Long tenure, strong company loyalty, and a rising stock price all quietly build concentration. Often, nobody decided to take on that risk on purpose.

Women in tech often fall into this pattern more than they realize. Selling vested shares can feel like betting against a company they’ve helped build.

Three Ways Concentration Risk Shows Up

A senior engineer at a mid-size tech company vests four years of RSUs and never sells a share. She ends up with 65% of her net worth in one stock.

An early employee at a startup exercises ISOs at a low strike price. She holds the shares through an IPO, watching them balloon to 80% of her portfolio. Once the company goes public, a lockup period of 90 to 180 days keeps her from selling, even if she wants to. Her concentration can spike further while she waits.

Someone else contributes the maximum to their ESPP every period, on top of RSU vesting. That doubles down on the same company from two directions at once.

The ISO vs. NSO Difference (And a Real Planning Landmine)

Not all stock options are taxed the same way. NSOs tax the spread between your strike price and the current value as ordinary income. That happens the moment you exercise. ISOs skip that ordinary income tax at exercise. Instead, the spread can trigger the Alternative Minimum Tax (AMT), even if you don’t sell a single share.

That’s the landmine. Exercise ISOs and hold them, and you may owe AMT on paper gains. If the stock later drops before you sell, you can end up owing tax on money you never actually saw. This has cost some early employees six-figure tax bills on shares that lost value. Model this before you exercise, not after.

Trading Windows Can Limit When You Sell

Most public tech companies only let employees sell shares during short windows after earnings releases. You can’t just sell whenever you choose. That makes a selling schedule harder to build. If you’re an executive or company insider, a Rule 10b5-1 plan can help. It pre-authorizes trades on a set schedule, so your sales happen automatically within compliant windows, and you’re not stuck making a timing decision each quarter.

What Concentration Risk Actually Costs You

In 2022, Meta’s stock fell roughly 64% for the year. The S&P 500 dropped about 19% over the same period. An employee holding $500,000 in Meta stock saw that value drop to around $180,000, on paper. That’s a loss of $320,000 if she needed to sell. The same $500,000 in a broad index fund would have dropped to about $405,000, a loss of roughly $95,000 if sold. Same year, same market, very different outcomes.

If she needed cash during that stretch, whether for a home purchase, a job loss, or any other reason, she’d have been forced to sell into that drop. That locks in the loss instead of waiting it out.

How to Check Your Own Number

Add up the current market value of your vested, unsold RSU shares, exercised stock options you still hold, and ESPP shares. Vested-but-unexercised options carry exposure too. Use the intrinsic value, current price minus strike price, as a rough estimate. If the stock is currently trading below your strike price, treat that value as zero. Those options are underwater and don’t add to your concentration number today.

Divide the total by your liquid net worth — your financial accounts (savings, retirement, brokerage) minus any non-mortgage debts such as student loans or car loans. Some planners include home equity; others exclude it since your home isn’t something you can rebalance out of. For concentration risk purposes, liquid assets are often the more useful denominator. If you own a home, run the calculation both ways to see how the number shifts.

Unvested RSUs don’t count toward this number yet. But they’re worth factoring into your planning horizon, since they represent concentration that’s still coming.

Action Steps

• Calculate your current concentration percentage using all your equity comp sources.
• Set a target ceiling for how much company stock you’re comfortable holding.
• Look into whether a regular selling schedule for vested RSUs, or a 10b5-1 plan if you’re an insider or executive, fits your situation.
• Think through how reinvesting proceeds could fit your broader financial plan.
• Review your number at least once a year, or after any major vesting event.

Common Questions

What percentage of my net worth should be in company stock?

A common starting point is keeping company stock under 10-15% of your total net worth. Risk starts to build above 20%. But this isn’t a one-size-fits-all rule. The right number depends on your income, timeline, other assets, and how much risk you’re comfortable carrying.

Is single stock concentration risk the same as investment risk?

Not exactly. All investing carries risk. But concentration risk is specific to holding too much of one asset, instead of spreading that risk across many.

Why is company stock riskier than other investments?

Your income, benefits, and career already depend on your employer. Holding a large equity stake ties your investments to the same source. A downturn can hit you twice.

Should I sell my RSUs as soon as they vest?

Your employer already taxes RSUs as income at vesting, whether you sell or not. So selling on a regular schedule, rather than holding indefinitely, is one reasonable approach. Holding a bit longer, if the stock has appreciated since vesting, can convert those gains to long-term capital gains rates. But that reintroduces concentration risk. This is worth weighing against your own goals and timeline, rather than following a blanket rule.

Does this apply if I have stock options instead of RSUs?

Yes, once they’re exercised and converted to shares. Vested-but-unexercised options carry exposure too. That’s through the intrinsic value between your strike price and the current stock price, even before you exercise.

How do I start diversifying without a big tax hit?

For RSUs, your employer withholds income tax at vesting no matter what. A selling schedule doesn’t avoid that. But it does manage the capital gains on any appreciation since vesting, and helps you avoid a large gain landing in one high-income year. For stock options, the timing of exercise matters more. That’s when ordinary income (NSOs) or AMT exposure (ISOs) gets triggered.

Want to see how this fits into your bigger picture? Read more on our Equity Compensation pillar page, or check out our related posts on RSU vs. Stock Options and the RSU wash sale rule.