Financial Planning: Diversification

How To Diversify Your Company Stock Holdings While Leveraging The Wealth In Your Stock Options

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?

Stockbrokers' Secrets (Part 5): What I Tell My Best Clients About Company Stock Diversification

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 (Part 6): What I Tell My Best Clients About Retirement Planning With Stock Compensation

W.E.B. Bantling
NEW! Many of my clients use stock compensation to boost retirement savings and lifestyles. Yet I find many do not see it in the bigger picture of retirement savings and withdrawal plans. Considering net worth, age, and company stock plan, I present the client with eight core points about both their stock grants and their 401(k) plans.

Too Much Of A Good Thing

Susan Hirshman
Investment Advisor
If you are reluctant to diversify at least a portion of your concentrated position in company stock, think about the risks and other implications of your decision. Not wanting to trigger large embedded capital gains tax at sale may really be an excuse for an emotional attachment to the stock.

Defying Diversification

Alyn Ackermann
Financial Advisor
Executives with both concentrated positions in company stock and retention requirements need to understand the risks and strategies.

Employee Stock Options Planning Remains Confusing

Marla Brill
Financial Advisor
Even the best financial advisors struggle with developing stock-option strategies and mastering the complicated tax rules. Deciding when to exercise can lead to tradeoffs between diversification and tax planning.

How To Value Your Stock Options

Deborah Adamson
MarketWatch
Understand why options have long-term value and how they fit into an overall diversified portfolio and financial-planning strategy.

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.

Lessons Of A Bear Market

Maureen Nevin Duffy
Journal of Accountancy
Investors who ignore history are doomed to repeat it. Although this article is not devoted to stock options, it discusses the advantages of an exercise-and-hold approach and diversification in down markets.

Don't Bet It All On One Stock

Jane Bryant Quinn
Washington Post Writers Group
If a significant chunk of your net worth is tied up in your company's stock and options, you might want to consider diversification strategies.

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What are the risks of owning stock?

When you exercise an option and retain the shares...

When should I sell my company stock?

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?

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...

UPDATED! Can my company set ownership guidelines or require me to retain a certain amount of company stock from a stock option exercise or a restricted stock grant?

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...

I believe strongly in company-stock ownership and its wealth-building potential, yet I need to diversify. I have both substantial company stock and in-the-money vested options. What should I consider when deciding whether to sell existing stock or whether to exercise options and immediately sell that stock in a cashless exercise?

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?

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?

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?

You are in luck. SEC Rule 10b5-1 now provides an affirmative defense...

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