If you're a tech employee, you probably have vested shares sitting in a brokerage account, more vesting next quarter, and maybe a refresher grant layered on top. All of it is stock in the same company that pays your salary. Is that too much?
There is no single percentage that answers this for everyone. A flat rule of thumb sounds simple, but it ignores how much you still have unvested, how volatile your employer's stock actually is, and how much of your total financial picture, not just your investments, already rides on that one company.
A better approach is to run yourself through a small set of self-assessment tests and see how many you fail.
Table of contents
- Why a single percentage rule doesn't work
- Test 1: the 'would you buy it today' test
- Test 2: the career-correlation test
- Test 3: the full-position test, including what you don't have yet
- Test 4: the sleep-at-night, worst-case test
- Test 5: the time-horizon and liquidity test
- Reading your results
Why a single percentage rule doesn't work
A flat percentage rule treats a stable, large-cap employer the same as a volatile, pre-IPO one. It treats someone whose spouse also works in tech the same as someone whose household income comes from an unrelated industry. It treats someone five years from retirement the same as someone twenty-five years out. None of those situations carry the same risk at the same percentage.
The more useful question is not 'what percentage am I at' but 'what happens to me if this stock falls 50% and I lose my job at the same time.' That combined scenario, a stock crash and a job loss, tends to happen together, because both are usually caused by the same underlying event: the company is in trouble.
This is why company stock concentration is treated differently from concentration in, say, a broad index fund.
With that framing, here are five tests.
Test 1: the 'would you buy it today' test
Look at your current holding in dollar or rupee terms. Ask a simple question: if this were sitting in cash right now, and you had to choose whether to buy that same dollar amount of your employer's stock as a new investment, would you?
If the honest answer is no, that is a signal. You are not obligated to keep a position just because it arrived as compensation instead of a deliberate purchase. A share you received as an RSU and a share you could buy on the open market carry identical risk once they are vested and sitting in your account.
Test 2: the career-correlation test
This is the test that separates company stock from any other concentrated position. Ask: if this company has a bad year, does my job, my bonus, and my ability to get hired elsewhere in this industry also take a hit?
For most tech employees, the answer is yes on all three counts. A downturn that hits your employer's stock price often coincides with hiring freezes, layoffs, and a tighter job market across the sector.
That means your 'safety net' (your paycheck and your ability to find a new one) is correlated with the exact asset you are holding. The more correlated your job security is with your stock's fate, the lower your tolerance for concentration should be, regardless of what percentage rule you'd otherwise use.
Test 3: the full-position test, including what you don't have yet
This is where most people underestimate their real exposure. When they mentally tally 'how much company stock do I hold,' they usually count only vested shares sitting in their brokerage account. That leaves out two things that are economically part of the same bet: unvested grants and refresher grants layered on top of the original grant.
Unvested RSUs are not yet yours. In most cases, if you leave your employer before your RSUs vest, any unvested RSUs are forfeited. Since the shares never become yours, you also don't owe any tax on forfeited unvested RSUs. That forfeiture risk is exactly why unvested stock is a different (and in some ways riskier) kind of exposure than vested stock: it disappears if you leave, but it still represents future net worth you are implicitly counting on and planning around, so it belongs in your concentration math even though it isn't a liquid asset yet.
Each vesting event also creates its own lot, and lots need to be tracked independently rather than lumped together. That discipline is useful here too: to see your real concentration, list every lot separately, vested and unvested, original grant and every refresher, and add them up.
Most people who feel 'moderately' concentrated when they only look at their vested shares discover they are heavily concentrated once unvested grants and refreshers are included.
Example: suppose you have vested shares worth $80,000, an original grant with $60,000 left to vest over the next two years, and a refresher grant worth $90,000 that just started vesting.
| Component | Value | Included in 'how much stock do I hold'? |
|---|---|---|
| Vested shares | $80,000 | Obviously yes |
| Unvested original grant | $60,000 | Often forgotten |
| Unvested refresher grant | $90,000 | Almost always forgotten |
| Total | $230,000 | This is the real number |
The result: someone who thinks of themselves as holding '$80,000 of company stock' is actually carrying $230,000 of exposure once the unvested pipeline is counted. That gap is the single most common reason people underestimate their concentration.
Test 4: the sleep-at-night, worst-case test
Take your full position from Test 3 and mentally cut it in half. Not the whole portfolio, just the company stock. Ask: does that change your life plans? Does it delay a home purchase, a wedding, a child's education fund, or your ability to cover a job gap?
If a 50% drop in this one position would meaningfully derail a near-term goal, the position is too large relative to that goal, independent of how it compares to your overall net worth. This test is deliberately blunt because stock-specific drawdowns of 50% or more are not rare events for individual companies, even large, well-known ones, over a multi-year holding period.
Test 5: the time-horizon and liquidity test
Ask what this money is for and when you need it. Company stock earmarked for a goal more than seven to ten years away can absorb more volatility.
Company stock you are implicitly counting on for a goal in the next one to three years (a down payment, a move, a career break) cannot, because you don't have time to wait out a bad stretch.
A related question: how liquid is the stock actually? Vested shares in a publicly traded company are liquid the moment any lockup or blackout period clears.
Shares in a private, pre-IPO company are not liquid at all until an exit event, which changes the calculus considerably, because you cannot sell your way out of concentration even if you want to.
Reading your results
You don't need to fail every test to have a real concentration problem. Failing even one or two, especially Test 3 (the full-position count) or Test 4 (the drawdown test), is a reasonable signal to act.
The response to that isn't a single mechanical percentage target. It's a plan: how much to sell, on what schedule, and what to do with the proceeds. That's a separate decision, covered step by step in How to Build an RSU Selling Rule Before Your Next Vest.
These five tests are a decision framework. They deliberately leave out country-specific tax mechanics so the same logic applies whether you're weighing this in the US, India, or anywhere else. Tax treatment of a sale is a separate question from whether you're overconcentrated in the first place.
