Diversifying Your Wealth: A Guide to Managing Employer Stock Options

One of the best ways to build wealth is to take advantage of stock options, bonus plans, or discounted shares offered by your employer. However, there is a downside to having too much of your wealth tied up in the same company that pays your income. If something goes wrong with that company, you could lose both your income and your wealth at the same time. This happened to many people who worked for Enron and similar companies. They lost everything and had to start over from scratch.

That's why it's important to diversify your portfolio and possibly reduce your exposure to your employer's stock. you might want to consider selling some shares and invest them in other areas, such as index funds, bonds, real estate, or alternative assets. many financial advisors might recommend this for you, and it's not a complicated process. Yes, you may have to pay some taxes on the sale of your stocks, but that's a small price to pay for lowering your risk and preserving your future.

You may have done very well with your employer's stock, especially if you work for a successful company like QuikTrip, Williams, or Magellan. But you don't want to put all your eggs in one basket. You might want to consider taking some profits off the table and diversify your portfolio. As they say in Vegas, the hardest part of gambling is knowing when to stop. You can't go broke taking a profit.

There are some strategies to minimize your tax liability when selling your employer's stock, such as spreading the sales over several years, donating some shares to charity, or using a tax-advantaged account. You should consult with a certified financial planner and a certified public accountant to help you with this. Don't just sell everything at once. Be strategic and smart about it.