Key Takeaways
- RSU vesting can create dangerous concentration risk. When RSUs vest, you might suddenly have 40%, 60%, or even 80% of your portfolio in a single stock (the same company providing your salary and benefits), which means you’re not diversified.
- Keep company stock to 10-15% of your total portfolio. Anything higher is taking on unnecessary risk. You’re already heavily invested in your company through your career, so your investment portfolio should balance that exposure, not amplify it.
- Sell strategically soon after vesting to minimize taxes. Your cost basis is set at the vesting price, so selling shortly after vesting means little to no capital gains tax. If you wait and the stock appreciates, you’ll owe capital gains on the growth.
- Rebalance at least twice a year. Check your allocation after major vesting events (typically spring and fall) and at year-end for tax planning. If you’re more than 5-10% off your target allocation, it’s time to rebalance.
- Reinvest proceeds into diversified, values-aligned funds. Don’t let cash sit idle after selling company stock. Put it into diversified index funds, ETFs, or socially responsible investments that match your environmental, social, and governance priorities.
If you’re a product manager, designer, engineer, or operations professional at a Bay Area, Portland, or Seattle tech company — and you just watched a batch of RSUs vest, this post is for you. Maybe it was your annual refresh. Maybe it was that initial grant from a few years back finally paying off. Either way, you just got a nice bump in your brokerage account.
Here’s the thing, though. That vesting event probably threw your portfolio completely out of whack.
If your company stock was 15% of your portfolio in January, it might be 40% now. And while it feels great to see that balance climb, having too much wealth tied up in a single stock is like putting all your eggs in one basket. A really expensive, really fragile basket.
So let’s talk about spring cleaning for your investment portfolio. Not the fun kind of cleaning where you Marie Kondo your closet, but the kind that actually protects your financial future.
Why RSU Vesting Season Throws Everything Off Balance
When your RSUs vest, you’re essentially getting paid in company stock. That’s fantastic for building wealth. But it also means your portfolio can become heavily concentrated in one position without you actively choosing that allocation.
I’ve worked with tech professionals who suddenly found themselves with 60%, 70%, even 80% of their investable assets in their employer’s stock. That’s not a diversified portfolio. That’s a bet. And it’s a bet on the same company that already provides your salary, your health insurance, and your career trajectory.
Think about it this way. If your company hits a rough patch, you could face layoffs at the same time your stock value tanks. That’s a double whammy nobody wants.
The Rebalancing Sweet Spot: Protection Without Overthinking It
Here’s what I typically recommend to clients after a major vesting event. Take a look at your overall asset allocation. Not just your 401(k) or your brokerage account in isolation, but everything together.
Ask yourself these questions:
What percentage of my total portfolio is in my company stock? If it’s more than 10% to 15%, you’re probably overconcentrated. Some people are comfortable going up to 20%, but that’s pushing it.
How does this fit with my risk tolerance and timeline? If you’re 10 years from retirement, you probably want less concentration risk than someone who’s 35 with decades to recover from market swings.
Does my current allocation align with my values? This is where things get interesting. Maybe you believe deeply in your company’s mission. But does that mean 50% of your wealth should ride on its stock performance?
A Simple Rebalancing Strategy You Can Actually Follow
Rebalancing doesn’t have to be complicated. In fact, the simpler your approach, the more likely you are to stick with it. Here’s a framework that works for a lot of tech professionals.
Step One: Set Your Target Allocation
Decide what percentage of your portfolio should be in stocks, bonds, and other asset classes. A common starting point might be 70% stocks, 25% bonds, and 5% alternatives or cash. But this depends entirely on your age, goals, and risk tolerance.
Within that stock allocation, decide how much you’re comfortable holding in your company stock versus diversified funds.
Step Two: Calculate the Gap
After your RSUs vest, figure out where you actually are versus where you want to be. If your target is 15% company stock but you’re sitting at 35%, you’ve got a 20% gap to close.
Step Three: Sell Strategically
This is where people get nervous. Selling company stock feels weird. You might worry about timing the market or missing out on future gains. But here’s the truth: diversification is more important than trying to perfectly time the peak.
You don’t have to sell everything at once. Consider selling in tranches over a few months. This smooths out any market volatility and makes the decision feel less dramatic.
Step Four: Reinvest in Alignment with Your Values
Once you’ve sold some company stock, don’t let the cash sit there. Reinvest it into diversified index funds, ETFs, or actively managed funds that align with your values.
This is where socially responsible investing comes into play. You can build a portfolio that performs well financially while supporting companies that match your environmental, social, and governance priorities.
Tax Considerations You Can’t Ignore
Before you start selling, let’s talk taxes. Because Uncle Sam definitely wants his cut.
When your RSUs vest, you’ve already paid ordinary income tax on their value. That’s the bad news. The good news is that your cost basis is set at that vesting price. So if you sell immediately after vesting, you likely won’t owe much (if any) capital gains tax.
But if you’ve been holding vested shares for a while and they’ve appreciated, you’ll owe capital gains tax on the growth. Short-term gains (held less than a year) are taxed as ordinary income. Long-term gains (held more than a year) get the lower capital gains rate.
Here’s a simple rule: if you’re going to rebalance anyway, doing it soon after vesting can minimize your tax hit.
Of course, everyone’s tax situation is unique. If you’re juggling multiple vesting schedules, ISOs, ESPPs, or other equity compensation, it’s worth running the numbers with a financial planner or tax professional.
What If You Really Believe in Your Company?
I get it. You work at an amazing company. You believe in the product, the mission, the leadership. You’ve seen the growth trajectory and you think the stock has room to run.
That’s great. Seriously. But belief doesn’t eliminate risk.
You can still be a true believer and protect yourself with smart diversification. Keep 10% to 15% in company stock if you want some upside exposure. But get the rest into a diversified portfolio that won’t crater if your company hits a rough quarter.
Remember, you’re already heavily invested in your company through your salary and career. Your investment portfolio should balance that concentration, not amplify it.
Building a Rebalancing Routine You’ll Actually Use
Here’s the secret that nobody tells you about portfolio rebalancing. It’s not a one-time event. It’s a habit.
I recommend checking your allocation at least twice a year. For tech professionals, the best times are usually right after major vesting events (typically in the spring and fall) and at year-end for tax planning.
Set a calendar reminder. Block off an hour. Pour some coffee. Pull up your accounts and see where you stand. If you’re more than 5% to 10% off your target allocation, it’s time to rebalance.
Some people prefer to rebalance automatically by setting up regular sales of company stock. Others like to do it manually so they can be more tactical about timing. Either approach works. The key is consistency.
When Rebalancing Gets Complicated
Sometimes rebalancing is straightforward. You sell some company stock, buy some diversified funds, and you’re done.
But sometimes it’s messier. Maybe you’ve got stock in multiple companies from previous employers. Maybe you’re juggling ISOs with complex AMT implications. Maybe you’re trying to coordinate this with your spouse’s portfolio.
That’s when it helps to have a financial planner in your corner. Someone who can look at the whole picture, run the tax scenarios, and help you make decisions that align with your long-term goals and values.
Your Spring Cleaning Action Plan
Ready to get started? Here’s your three-step action plan for this month.
This Week: Pull up all your investment accounts and calculate your current allocation. Don’t just look at your 401(k) in isolation. Include your brokerage account, any old 401(k)s from previous employers, IRAs, and that company stock sitting in your equity compensation account.
Next Week: Decide on your target allocation. If you’re not sure where to start, a good rule of thumb is to keep company stock under 15% of your total portfolio. The rest should be diversified across asset classes that match your risk tolerance and timeline.
Within 30 Days: Execute your rebalancing plan. Sell what you need to sell, reinvest in diversified holdings that align with your values, and set a calendar reminder to check in again in six months.
And if this feels overwhelming, that’s completely normal. Portfolio rebalancing after a major vesting event involves real money, real tax implications, and real decisions about your financial future. There’s no shame in asking for help.
Let’s Build a Portfolio That Actually Matches Your Life
Your investment portfolio should support the life you want to live, not keep you up at night worrying about concentration risk.
If your RSUs just vested and you’re sitting on a pile of company stock, let’s talk about how to rebalance in a way that protects your wealth, minimizes taxes, and aligns with your values.
Schedule a consultation at wovencapital.net/schedule and we’ll walk through your specific situation together. No sales pitch, no pressure. Just honest conversation about building a financial plan that actually works for you.