RSU concentration risk: why holding too much of one stock is risky
If you work at a company like Google, Meta, Nvidia, or even a large Indian tech firm, chances are a portion of your salary comes in the form of RSUs — Restricted Stock Units. They vest over time, feel like a bonus, and are easy to hold on to. But if those RSUs have quietly become the largest chunk of your net worth, that's worth paying attention to.
This is what wealth planners call RSU concentration risk — when too much of your financial life is tied to a single company's stock.
Why concentration in one stock is a problem
Think about it this way. Your income already depends on your employer. If the company hits a rough patch, your salary, bonus, and career growth are all affected. If your investment portfolio is also heavily weighted in that same company's stock, you're doubling down on the same bet.
This isn't a hypothetical. Tech stocks — including large, well-known names — have seen sharp corrections in the past. Employees who held on expecting prices to recover have sometimes waited years. Some are still waiting.
Diversification — spreading your wealth across different companies, sectors, and asset types — is the straightforward answer. But most people hold on to RSUs for the wrong reasons.
The most common reasons people don't sell
The first is emotional attachment. You believe in the company. You work there, you know the product, and selling feels disloyal. But loyalty and financial planning are different things.
The second is tax confusion. RSUs in India are taxed as salary income when they vest. If you're at a foreign company, there's also the foreign exchange and FEMA reporting angle to consider. Many people avoid selling simply because they're unsure of the tax treatment. That's a planning problem — not a reason to hold.
The third is inertia. RSUs arrive, vest, and sit. There's no active decision to buy — so there's no active decision to review either.
What a better approach looks like
The goal isn't to sell everything the moment RSUs vest. It's to treat them like any other asset — one that needs to fit into a broader plan.
A few questions worth asking: What percentage of your total net worth is now sitting in your employer's stock? If that number is above 10–15%, it's worth a hard look. Is your company's stock performance tied to your job stability? What would your financial life look like if both took a hit at the same time?
Systematically selling a portion of vested RSUs — and reinvesting those proceeds into a diversified portfolio — is one of the most straightforward ways to reduce this risk without making dramatic moves. RSU taxation in India has its nuances, and if your RSUs are from a foreign-listed company, there are additional considerations around asset declaration and FEMA compliance. Getting this right matters.
If you'd like to think through how RSUs fit into your broader wealth picture, we're happy to have that conversation. It usually doesn't take long to see where the concentration sits — and what to do about it.
