The issue of too much money in one investment

Some households find themselves with a large investment in one single stock.

That can happen when a great investment takes off (think: Apple or Amazon). But concentrated equity positions can also occur through employee compensation arrangements or inheritance.

This can be both good fortune and significant risk. Past performance of a stock is no guarantee of future results, and if that one stock were to tumble, it could have serious repercussions for your financial wellbeing.

If you have a large amount of wealth in one single asset, talk to your estate planner about strategies to protect yourself from risk. One option, of course, is to sell some of that asset to diversify your portfolio.

However, selling assets doesn’t always make sense. When that’s the case, hedging strategies can act as insurance against loss of value in the stock. Alternately, you can use the stock as leverage to borrow against your portfolio and use the loan to invest in other assets.

Resolving concentrated equity positions can be complicated, emotionally and financially. Whether you choose liquidation and diversification or some other strategy, be proactive in managing that risk. Informed decisions now can help protect your nest egg long-term.

Call Now Button
Email us now
close slider
Call Now Button
Email us now
close slider