Not investment advice. This guide explains a concept. It doesn’t tell you what to do with your shares.
The problem: one company, many bets
Think about what already depends on your employer. Your salary. Your bonus. Your next raise. Your RSUs. If the company has a bad stretch, all of those can take a hit at the same time.
Now add the rest of your wealth. If a big chunk of it is also your employer’s stock, one company is carrying a lot of your financial life.
How concentrated is concentrated?
There’s no official number, and nobody tracks it for India. One data point: a Candor survey of more than 1,000 tech workers, reported by a16z Future, found some held as much as 90% of their wealth in their employer’s stock. That’s a US survey, so treat it as a sign of what can happen, not a typical Indian number.
Most people don’t choose to get there. Every vest adds more shares, and the share of your wealth in one stock creeps up. The diversification calculator shows where you stand.
What diversifying does (and doesn’t do)
It does:
- Limit how much a single stock can hurt you.
- Separate your wealth from your employer’s fortunes.
It doesn’t:
- Promise more money. On average it doesn’t raise your returns.
- Come free. If the stock soars, you give up part of the gain.
An example. Say ₹25,00,000 of your net worth is company shares and ₹50,00,000 is everything else. You move 30% of the shares into other investments.
| If the stock | Holding everything | Diversifying 30% | Difference |
|---|---|---|---|
| Falls 40% | –₹10,00,000 | –₹7,00,000 | ₹3,00,000 protected |
| Rises 40% | +₹10,00,000 | +₹7,00,000 | ₹3,00,000 of gain given up |
This assumes the money you move stays flat, and leaves out tax and costs. Real investments move too.
A simple test
If your company paid this vest as cash instead of shares, would you put all of it into its own stock? If not, holding the vested shares is a choice you’re making, even if it feels like the default.
Ways people approach it
- A rule set in advance. For example, selling a fixed share of each vest as it arrives, so you aren’t deciding share by share.
- Rebalancing now and then. Checking once or twice a year and trimming back to a level you’re comfortable with.
- Starting from sell-to-cover. Some shares are sold on vest day anyway, so look at what’s left. The sell-to-cover calculator helps.
These are common approaches, not recommendations.
What about tax?
- You already paid tax on the vest-day value. That value becomes your cost, so selling soon after a vest usually means little or no capital gain. Rupee moves can still create a small gain or loss.
- Waiting adds exposure to the price and builds up a gain that is taxed when you sell. Guides use a 24-month line between short-term and long-term. Check yours with the holding period checker.
- Tax is one cost to weigh next to the risk of holding. The tax guide has the detail.
Other things to weigh
- Blackout windows can stop you selling at certain times.
- Where the money goes. Bringing proceeds to India or reinvesting abroad has its own rules, such as LRS, TCS and reporting. We’ll cover them in the money guides.
- Your goals and timelines. A house down payment in two years is different from retirement in twenty-five.
- Advice. For a decision this personal, talk to a SEBI-registered adviser and a CA.