Concentrated Stock Strategies for High Earners

A single stock that has grown to a large share of your net worth is a success story and a risk at the same time. For high earners, it is often both: the company stock that doubled in value is now the same asset that could wipe out years of savings if it collapses.

Systematic selling plans

A 10b5-1 plan lets you set a schedule to sell shares in advance, which removes emotion from the decision and can provide a defense against insider-trading concerns if you are an executive or have access to material information. The plan must be adopted in good faith and before you know of any non-public information.

Exchange funds

An exchange fund allows you to contribute a concentrated stock position to a partnership alongside other investors doing the same. After a holding period, usually seven years, you receive a diversified basket of stocks. The contribution is not a taxable sale, so you defer capital gains while diversifying.

Collars and options

A collar strategy involves buying a put option and selling a call option on the same stock. It limits downside and caps upside, and can be useful if you want to reduce volatility while you build a selling plan. Collars are not costless and require careful execution.

Tax-aware selling

If you have shares with different cost bases, you can sell higher-basis shares first to limit capital gains. You can also time sales across tax years, harvest losses elsewhere, or donate appreciated shares to charity through a donor-advised fund.

Concentration is not a character flaw. It is usually the result of working somewhere that grew quickly. The goal is to convert that single-stock success into durable, diversified wealth without giving half of it away to taxes.