How much company stock should you actually hold?
There is no magic percentage, but most people hold more of their employer than they would if they were buying it fresh today. The real question is how much single-stock risk you can afford.
The useful way to frame concentration is not a fixed percentage but a question: if you had the cash today, would you buy this much of one stock? For most people the honest answer is no, which points toward diversification over time.
Why concentration is a hidden risk
A single stock carries company-specific risk that a diversified portfolio does not. When that stock is also your paycheck, the risk is doubled: your job and your net worth move together.
How to think about diversifying
Diversification does not have to be all at once. Rules-based selling, tax-aware lot selection, and vehicles like exchange funds can reduce concentration while managing the tax, ideally coordinated with your CPA.
Common questions
Is there a rule of thumb?
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