Tax Center / Global Tax Guide / Glossary / Discussion / Newsletters / About Us
Register Log in
myRecordsmyToolsmyClients
   Financial Planning   
Strategies   
Advanced Strategies   
Diversification   
High Net Worth   
Estate Planning   
Gifts   
Dividends   
Year-End Planning   

QuizzesCFP® Credit
Earn up to 15 continuing education credits when you pass our exams for financial planners

Annotated diagram of Schedule DTax errors can be costly! Don't draw unwanted attention from the IRS. Our Tax Center explains and illustrates the tax rules for sales of company stock, W-2s, withholding, estimated taxes, AMT, and more.


Financial Planning: Diversification


Test Your KnowledgeTest your knowledge with our Financial Planning quiz.


  Articles   FAQs  

Your Company Stock: The Importance Of Diversification This is premium content

Laura Tanner, PhD, CFP®
Podcast included! Through the author's personal example, this article presents the dangers of a concentrated stock position, discusses why diversification may be hard for employees with shares from equity compensation, and explores strategies for preserving your net worth.

The Equity Compensation Planning Dilemma For Corporate Executives

Geoffrey M. Zimmerman, CFP®
Executives, as corporate insiders, must perform a delicate balancing act to meet the needs, demands, and perceptions of the various constituencies interested in their company's stock. This article looks at these concerns and explores ways to manage them that can improve the chances of achieving financial goals.

Stock Option Strategy To Diversify Away Your Company Stock Risk This is premium content

Robert J. Pyle
While you may have great faith in your company's stock, you also need to diversify your investment portfolio. For employees with stock options, doing this successfully requires a careful analysis to figure out the optimal times to exercise and sell.

How To Diversify Your Company Stock Holdings While Leveraging The Wealth In Your Stock Options & Other Equity Grants This is premium content

Tom Davison
Once you have settled on a comfortable ownership percentage of company stock in your combined holdings, how do you decide which shares and options to hold and which to sell?

How To Develop A Stock Option Exercise Strategy To Reach Your Financial Goals (Part 1) This is premium content

Alan B. Ungar
Podcast included! One of the most vexing investment decisions you will ever make involves when to exercise your stock options and when to sell the shares. This article series will give you the tools for determining that time.

Stockbrokers' Secrets: Company Stock Diversification This is premium content

W.E.B. Bantling, with Bruce Brumberg
The biggest challenge I face when counseling my clients is convincing them to avoid owning too much of their company's stock. Tales about employees of Lehman Brothers or Enron who lost their entire net worth have shaken these clients to attention.

Stockbrokers' Secrets: Retirement Planning With Stock Compensation (Part 1) This is premium content

W.E.B. Bantling
Many of my clients do not see stock compensation in the bigger picture of retirement savings and withdrawal plans. Considering net worth, age, and company stock plan, I present the client with these core points about stock grants, 401(k) plans, nonqualified deferred compensation, and IRAs.

Tax Strategies With Stock Options, Restricted Stock, And Deferred Compensation This is premium content

Andy Wagner
Having both nonqualified stock options and nonqualified deferred compensation gives you a tremendous amount of flexibility to optimize your financial planning and tax situation. In this article, I explain how I have used the two plans in concert with one another.

Executive Clients: Taking Stock Of Their Portfolios

Elizabeth Wine
On Wall Street
Many executives hold far too much of their company stock but do not want to sell it, as they feel the stock price may rise again. Prudent diversification requires overcoming these and other psychological hurdles. (Registration is required.)

The Risks And Rewards Of Company Stock

Sue Stevens
Morningstar.com
Experts disagree on what the "proper" amount of company stock is. Figure out how dependent you are on your company's stock, the different places you own it, and whether/how you can diversify.

Return to top of this page

What are the risks of owning my company's stock?

When you retain shares acquired through stock compensation or an ESPP, you are subject to the advantages and disadvantages of being an owner of the company. By owning stock, you are subject to both market risk and...

When should I sell my company stock? This is premium content

We can't give you specific advice on this. We can give you some guidance on how to think about the answer either on your own or with a financial advisor...

How do I diversify my company-stock holdings? This is premium content

Diversification is a sound practice in building and preserving personal wealth. If, along with stock options, you also own your company stock outright, settle on a comfortable ownership percentage...

UPDATES! Can my company set ownership guidelines for company stock? Any survey data about their use? This is premium content

Stock ownership guidelines specify how much company stock you must own in total or as a multiple of salary. Most companies count in the calculation the...

UPDATES! Can my company require me to retain a certain amount of company stock from a stock option exercise or a restricted stock grant? This is premium content

Although stock ownership guidelines are more common, retention mandates and requirements for CEOs and senior executives have become popular, as shown by survey data and corporate proxy statement disclosures. Supporters of share retention rules believe they show...

I have faith in my company's stock and want to own it, yet I also must diversify. I have both shares and in-the-money vested options. Should I sell the shares I already have or exercise options and immediately sell those shares in a cashless exercise? This is premium content

What you need to consider depends on your stock option plan, personal financial goals and risk tolerance, and complex tax rules, including...

How do I calculate whether my after-tax gains will be greater by investing my current option spread into a mutual fund or a diversified stock portfolio, as opposed to just waiting to exercise the options at the end of the term? This is premium content

Let's look at the various tax permutations for nonqualified stock options (NQSOs)...

What is a concentrated stock position, and what can I do to protect myself and get cash for other purposes? This is premium content

A concentrated stock position occurs when a significant chunk of your net worth is tied up in a single stock. Strategies for hedging, diversification, and liquidity include...

I want to set up a program with my company and broker in which I automatically exercise options and sell stock to pay a regularly expected bill as it's received, such as my child's tuition. Can this prearranged selling plan violate insider trading laws and my company's blackout rules? This is premium content

SEC Rule 10b5-1 now provides an affirmative defense...

Return to top of page