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.
Setting a written concentration limit
The hardest part of unwinding a concentrated position is not the mechanics, it is deciding when. Every threshold feels arbitrary in the moment, and a stock that has doubled twice already makes a persuasive case for holding a third time. The fix is to set the rule while you are calm and follow it while you are not. A workable version: any single stock above 15% of investable net worth gets trimmed to 15% within two quarters, and anything above 25% gets trimmed immediately regardless of tax cost. Write it down, share it with someone, and let the calendar rather than the price chart trigger the trade.
Count unvested equity in the exposure
Most people measure concentration using only the shares they already own. If four more years of RSUs are scheduled to vest, and your salary and health insurance also come from the same company, your real exposure is much larger than the brokerage statement suggests. A layoff at a company whose stock just fell 40% takes your income, your equity, and your benefits in the same week. That correlation is the actual risk, not the volatility number.
Charitable giving as a diversification tool
If you already give to LGBTQ+ advocacy, community health, or family-building organizations, gifting appreciated shares instead of cash removes the position without triggering capital gains, and you generally deduct fair market value if you itemize. A donor-advised fund lets you take the deduction in a high-income year — the year a large tranche vests, for instance — and distribute the grants over the following decade. For households giving five figures a year, this is often the cheapest share of the position to unwind.
What the 2026 rules change
Long-term capital gains rates were not overhauled by the 2025 tax law, but the higher standard deduction and the revised SALT treatment change where your taxable income lands, which in turn changes the bracket a realized gain falls into and whether the 3.8% net investment income tax applies. Two earners in a high-tax metro should model the sale in the context of the whole return rather than assuming a flat 15% or 20%.
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.