Concentration risk calculator
See how much of your net worth is riding on a single company stock, and the line where it gets dangerous.
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How much of your wealth is actually riding on one company? Most people guess low, by a lot. This walks you through the one number that matters, your single-stock concentration, using a pocket calculator and five minutes. No spreadsheet required, and the math is simpler than the panic it usually prevents.
What you are measuring
The number you want is the share of your investable net worth sitting in one company’s stock. Investable net worth is what you could actually move around: brokerage accounts, retirement accounts, cash, your equity comp. It leaves out your house and anything you would never sell to rebalance.
The trap is counting only the shares sitting in your main brokerage account. Every form of your company stock belongs in the pile, and people forget half of it.
Employer stock is the worst kind of concentration
Your paycheck and this position are the same bet. If the company stumbles, the stock falls and the layoffs start in the same quarter, so you can lose your income and your savings at once. A 20% slice in a random stock is risky. A 20% slice in your employer is two bets on one number.
Run the numbers
Add up every form of your company stock
Count the in-the-money options and cash-settled grants too
Add the value you would walk away with from vested options if you exercised today, meaning the spread above the strike, not the full share price. If you hold SARs or phantom units tied to the same stock, add their current payout value. They are not shares, but they rise and fall with the same company, so they are part of the same bet.
Total your investable net worth
Add up everything you could sell or redirect: all brokerage and retirement accounts, cash, and the company-stock total from the steps above. Leave out your home and other assets you would not touch to rebalance. This is the denominator.
Divide and read the line
Company stock total, divided by investable net worth, times 100. That percentage is your concentration. Past roughly 10 to 20 percent in a single name you are carrying real concentration risk, and the higher you go above that, the more one bad earnings call can reset your life.
How to read your number
A worked pass makes it concrete. Say you hold $300,000 of company stock across RSUs and ESPP, plus $50,000 of in-the-money option spread, against $700,000 of total investable net worth. That is $350,000 over $700,000, or 50 percent. Half of everything you could move rides on one company that also signs your paycheck.
The fix is not to sell it all tomorrow. The fix is to pick a ceiling, then close the gap to it on a schedule instead of waiting for a top that may never come. The full method is in when your RSUs are too big a share of your net worth.
Caution
Do not let the tax bill set your risk. People sit on a 60 percent position to dodge a capital gains bill that is a small fraction of what they are risking. The tax tail wags the dog. The tax on a trim is known and capped. The downside of staying concentrated is not.
Should I count shares inside my 401(k) or IRA?
Yes, for measuring concentration. The risk is identical whichever account holds the stock. The tax of selling differs, because trades inside a retirement account are not taxable events, which actually makes those the cheapest shares to trim first. So count them in the exposure number, and reach for them early when you start selling down.
What if a lot of my position is unvested?
Measure your concentration on what you actually hold today, because unvested grants can still evaporate if you leave or the company falters. Then watch the trend. If your future vests will pour even more of the same stock onto the pile, plan to sell at each vest by default, since shares sold right at vesting usually trigger little or no extra capital gain.
What this means for you
Run this once and the abstract worry becomes a single number you can act on. Add every form of the stock, divide by what you could actually move, and compare it to your own ceiling. If you are well over the line, the answer is a steady, scheduled sell-down, not a guess about the price. If the number scares you and a big tax bill is the only thing holding you back, a quick fit check can size the real cost of fixing it before it fixes itself the hard way.
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