How much of my portfolio should be in my employer's stock?

Common professional rules of thumb treat roughly 10% in any single stock as the level to start managing down, and flag employer stock sooner because your paycheck already depends on the same company. There is no universal number; measure your own exposure and worst case. Educational, not advice.

Are RSUs already diversified since I get them regularly?

No: regular vesting diversifies WHEN you receive shares, not WHAT you hold. Unsold vests accumulate into a growing single-stock position. Many people treat each vest like a cash bonus that happens to arrive in shares, and redeploy on a schedule.

What is the risk of holding one great company?

Even great companies have delivered 60% to 90% drawdowns, and some never recovered. The market's long-run return comes from a small minority of big winners you cannot reliably identify in advance; an index holds them by construction.

Should I sell my company stock all at once?

That involves taxes, blackout rules and your own situation, so it is a decision for you (and possibly a tax professional), not a guide. What we can show you is the measurable part: what the position does to your portfolio's risk, and how trims change it.

Employer Stock and Single-Stock Concentration: How Much Is Too Much?

7 min read · Updated 2026-09-07

Nobody decides to bet their future on one company. It happens passively: RSUs vest every quarter, the share price does well, selling feels disloyal or tax-scary, and five years later one ticker is 40% of your net worth, sitting next to the paycheck, health insurance and career prospects that depend on the same employer.

This guide is about seeing that exposure clearly: why single-stock risk is different in kind from market risk, what rules of thumb professionals use, and how to measure what your concentration is actually doing to your portfolio. Educational, not advice; selling decisions involve taxes and personal factors we cannot see.

Measure my concentration risk →

Why one stock is a different kind of risk

A diversified index and a single stock do not just differ in degree; they differ in what can happen:

•A broad index has, so far, always eventually recovered its crashes; an individual company can fall and simply never come back (bankruptcies, disruptions, frauds have taken even household names to zero).
•Single stocks routinely swing two to three times harder than the market, and the market's roughly 50% worst cases become 70% to 90% worst cases for individual names.
•With employer stock, the correlation is you: the scenario that craters the stock (industry trouble, layoffs) is the same scenario that threatens your income, at the same time.

What concentration does to outcomes

As a hypothetical: two portfolios of $500,000. One is fully diversified; the other holds 40% in one stock and 60% diversified. If the single name loses 60% (an unremarkable single-stock event) while the market is merely flat, the concentrated portfolio drops by $120,000, a 24% hit, from one company's bad stretch.

The upside argument is real (concentration is how outsized fortunes are made) but it is a lottery-shaped trade: studies of individual stocks find most underperform cash over their lifetimes while a small minority drive all the market's gains. Holding the market catches the winners by construction; holding one name is a bet you can already name.

One bad year for one stock (hypothetical $500k portfolio)

Diversified, market flat

$500k

40% in one stock, it falls 60%

$380k

Illustrative arithmetic, not a prediction. Run your real position sizes in the tools to see your own sensitivity.

The rules of thumb (and their logic)

There is no universal number, but the conventions cluster:

•Many advisors flag any single stock above roughly 10% of investable assets as concentration worth managing; 5% is a common comfort level.
•For EMPLOYER stock the flags come earlier, because your income already rides the same company.
•The common playbook is mechanical rather than heroic: sell vested RSUs on a schedule (many treat vests like cash bonuses), redeploy into the diversified core, and let rules rather than feelings decide. Taxes and blackout windows are real constraints: plan with them, not around them.

Measure yours before deciding anything

Concentration is a measurable property, not a vibe. Enter your actual portfolio, employer shares included, and look at three numbers: the single-name weight, how correlated the rest of your portfolio is with it, and what a severe single-stock drawdown would do to the total. Then stress test the whole book through past crises with and without the position trimmed, and compare the outcomes side by side.

Seeing that a trim changes the worst case dramatically while barely denting the expected case is, for most people, the moment the decision stops feeling like disloyalty and starts feeling like engineering.

Try it yourself

Asset CorrelationsSee how much of your portfolio secretly moves with your employer's stock.Open tool →Stress TestCompare crisis outcomes with the position held vs trimmed.Open tool →Backtest PortfolioMeasure volatility and drawdown with and without the concentration.Open tool →

FAQ

How much of my portfolio should be in my employer's stock?: Common professional rules of thumb treat roughly 10% in any single stock as the level to start managing down, and flag employer stock sooner because your paycheck already depends on the same company. There is no universal number; measure your own exposure and worst case. Educational, not advice.
Are RSUs already diversified since I get them regularly?: No: regular vesting diversifies WHEN you receive shares, not WHAT you hold. Unsold vests accumulate into a growing single-stock position. Many people treat each vest like a cash bonus that happens to arrive in shares, and redeploy on a schedule.
What is the risk of holding one great company?: Even great companies have delivered 60% to 90% drawdowns, and some never recovered. The market's long-run return comes from a small minority of big winners you cannot reliably identify in advance; an index holds them by construction.
Should I sell my company stock all at once?: That involves taxes, blackout rules and your own situation, so it is a decision for you (and possibly a tax professional), not a guide. What we can show you is the measurable part: what the position does to your portfolio's risk, and how trims change it.

Key terms in this guide

Plain-English definitions in the Learning Hub.

Correlation →Diversification score →Volatility (annualized standard deviation) →Maximum drawdown →Beta →

Stop guessing — run the numbers on your own portfolio, free.