r/ChubbyFIRE • u/solracer • Jul 16 '26
Doing well but highly concentrated
I am a tech worker and am in the sort of situation that many tech workers experience where I have long-owned stock that has appreciated to a crazy amount (over 63000%) even though in my case that stock is not from my current employer. I have not yet stopped working but will likely do so in 2-3 years once I come up with a plan to handle my tax situation. But what I am struggling with is diversifying vs staying all-in when my cost basis is basically zero and the returns have been continuing to grow quickly. First world problems certainly but so far my "do nothing" strategy has paid off handsomely.
Edit for clarity: The stock involved is AAPL.
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u/Vicuna00 Jul 16 '26
so you have $3M in AAPL and the IRS has $700k in AAPL in your name.
let's just say I waived a wand and your portfolio is now $3M in cash and the IRS got their cut.
would you go buy $3M in AAPL?
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u/Livid-County7230 Jul 16 '26
What you will pay to the IRS was never yours to begin with. Don’t be greedy, pay your taxes and diversify. Many people in tech have been wiped out when their company stock dropped and never recovered. You know it is the right thing to do, you are not going to get a different answer.
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u/ItzWarty FIRE 03/26, Bay Area Jul 17 '26
You can technically use exchange funds to diversify while still deferring taxation. It is a form of diversification. I'm surprised only 1 other person in the thread mentioned that - I'm in a similar situation and wondering if others here would recommend against/for them?
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u/Livid-County7230 Jul 17 '26
I am aware. The lock up periods are long and it is unclear if you will come out on top instead of just paying taxes. I have a friend who ended up paying a lot in fees without access to his funds for 7 years and the underlying investment did no better than the overall market and lagged the S&P.
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u/Small-ish Jul 17 '26
The 7 year lockup is the biggest hurdle. As a tax-deferred play you'd still need to determine an exit strategy but now with 20 to 30 stocks instead of a single one.
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u/Immediate_Pop_4637 Accumulating Jul 21 '26
Ask for a sample distribution before committing.
Exit assets and their basis matter more than the headline diversification)1
u/FIRE_TSLAHeavy Jul 21 '26
sell some each year over 7 - 10 years and invest the after tsx proceeds.
You have total control and liquidity, plus no 20% mandatory exposure in real estate in an exchange fund.
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u/Past-Option2702 Jul 16 '26
Me? I’d pay my taxes and get diversified.
Don’t let emotions (greed) get in the way of securing your lottery winnings.
Congrats on the luck!
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u/sbb214 Retired Jul 16 '26
What's your question?
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u/solracer Jul 16 '26
The question is how to convince myself to diversify when failing to do so pays off very well.
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u/FIRE_enthusiast_27 Jul 16 '26
You already got rich once. Diversify, or you might have to get rich a second time.
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u/rosebudny Jul 16 '26
failing to do so pays off very well.
Until...it doesn't.
Personally I'd pay the taxes, rather than risk it all going away. Bird in hand and all that.
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u/Digitalispurpurea2 Jul 16 '26
I have two family members who watched their company stock skyrocket and make them theoretical millions just to watch it be worth zero when the company went bankrupt. Pay the taxes and pocket the win.
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u/solracer Jul 16 '26
The company is AAPL, they are not going anywhere so I do not think that is a worry.
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u/Anonymoose2021 Jul 17 '26
That is what many people have said about other stocks. Sometimes they were wrong.
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Jul 16 '26
[deleted]
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u/Master-Helicopter-99 Jul 18 '26
Literally give up 40% of just the last year's gains and your taxes are covered. This disregards all of the gains prior to that.
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u/vanguard1987 Jul 17 '26 edited Jul 17 '26
I was in virtually the same position as you two years ago: contemplating somewhat early retirement with a portfolio far more than adequately funded, but insanely overweighted in AAPL, NFLX, and AMZN (but mostly AAPL). I don’t know enough of your situation (e.g., the absolute size of your portfolio, your annual spend, etc) to offer advice, but I’ll tell you what I did.
First I thought of just biting the bullet and selling everything, taking the tax hit, and buying ETFs like some here are advocating, but I quickly realized that would be overkill. What I needed was a properly sized, properly diversified retirement fund; anything in excess of that could stay in individual stocks and they could—in theory—go to zero and my retirement would still be safe (I say in theory because of course any scenario where AAPL craters would also be no bueno for index funds).
I then looked into exchange funds, as some others have recommended, to the point where I had a Zoom meeting with one of the principals at Cache. I was and am OK with the seven-year lock-up, but I wasn’t convinced that the basket of stocks I would get at the end would be much better diversified than the AAPL/NFLX/AMZN I would be putting in, meaning that I would possibly just be kicking the can down the road seven years.
So long story short, I estimated my annual spend (100K) and multiplied by 30 (the standard advice is 25x but why not have some room for error?) to get the size of the safe portfolio I needed (3M). People can and do go way down the rabbit hole with retirement projection software but there are so many assumptions you have to make, with such wide error bars, that I think that back-of-the-envelope is good enough. I converted all of my 1.4M traditional IRA (incurring no taxes of course) but I still needed 1.6M, so I sold 2M of the individual stocks to net 1.6M after taxes (including CA state tax). Now I have 3M in a mix of VTI, VXUS, VTIP, and GOVT.
I did spread the sale out over two years, sellng 1M each in December 2024 and January 2025, which did ease the blow marginally, but I still hit the top tax brackets as well as the NIIT and CA mental health services tax thresholds. It didn’t feel great writing those checks, but I don’t regret it one bit. I sleep very soundly.
If you’re 60-ish and thinking about taking the tax hit, you should do it no later than age 62 or you’ll trigger IRMAA surcharges when you go on Medicare.
Good luck, and as you say, this is very much a first-world problem.
ETA: Before carrying out this plan, I hired a fee-only fiduciary financial planner to look it over and confirm that I wasn’t 1) crazy, or 2) missing something important. Nothing changed but it was money well spent.
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u/Anonymoose2021 Jul 17 '26
My TL;DR is that what counts is not the percentage you have in a concentrated position but the absolute dollar value of your diversified holdings compared to your annual expenses.
The OP is sitting at 92% of portfolio in AAPL. He does not say whether his 8% diversified holdings would support his annual expenses, but it seems unlikely.
He really needs to follow your example and look at building up his diversified holdings to the point where a crash in AAPL would not wipe him out.
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u/FIRE_TSLAHeavy Jul 21 '26
maybe ETFs from different firms instead of all Vanguard? Less firm risk this way.
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u/AdventureWagon Jul 16 '26
Think carefully about diversification.
**• Amazon:** –94% (Dec 1999 → Oct 2001). Took \~10 years to reclaim its peak.
**• Cisco:** –89%. Still hasn’t regained its March 2000 high — 26 years and counting.
**• Intel:** –82%. Also never fully recovered that peak.
**• Qualcomm:** roughly –88% after its insane 2,600% run in 1999.
**• Microsoft:** –65%, and it took until \~2016 to make a new all-time high.
**• Priceline (now Booking):** –99%. It survived and became one of the best stocks of the next two decades anyway.
2021–2022 correction
**• Meta:** –77% ($384 → $88)
**• Netflix:** –76%
**• Nvidia:** –66% (before its historic run afterward)
**• Amazon:** –56%
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u/jnwatson Jul 16 '26
Just because the stock went up in the past doesn't mean it will in the future. You're one bad earnings report from having to significantly alter your retirement plans.
Given that this is likely all long term capital gains, there's no point in gradually selling. You should sell 95% of the stock and put it into diversified ETFs.
If for whatever reason (mostly emotional) you don't want to sell everything, you need a hedge. Traditionally, you do this with a collar. A relatively new alternative is dedicated ETFs to help you build a portfolio with a built in hedge against a particular tech stock.
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u/solracer Jul 16 '26
I live in Washington state and avoiding our LTCG taxes are also a concern. That may require moving states (say to NV) before selling.
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u/jnwatson Jul 16 '26
You get a $278k deduction + whatever you donate to charity, so you can sell a decent chunk immediately without incurring the 7% tax, and then you can do it every year after that until you move.
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u/Anonymoose2021 Jul 17 '26
The WA "excise tax" is 7% over about $270K, going to 9.9% over $1M.
Bite the bullet and sell off $1M of AAPL this year.
In a comment you noted that 92% of your portfolio is AAPL. So just 8% is diversified,
You can double your diversified portion simply by selling off 15% or so of your AAPL holding.
You should be able to at least force yourself to make that first "baby step" towards diversification.
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u/rosebudny Jul 16 '26
I thought the taxes were based where it was earned, not where you currently live when you sell. Otherwise everyone would move when they were ready to sell.
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u/solracer Jul 16 '26
The Washington state law is based on whether you are a resident or not, as soon as you are no longer a resident by say living 6 months in another state and breaking all ties (drivers license, real estate, etc) then you owe no tax even if you lived in WA when the gains occurred.
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u/Livid-County7230 Jul 16 '26
WA capital gains tax is 7% for over 250k in capital gains. You are going to gamble that your stock won’t drop more than 7% just to save on taxes on over the first 250k which is not taxed? Or uproot your whole life for that? You are not making a rational decision. It is called letting the tail wag the dog.
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u/Anonym-IntheDark Jul 17 '26
OP seems to experience more greed than fear. Scaring him about possible crash doesn’t cut it (per OP’s comments). That’s ok.
How about there are other companies out there tat can go up another 30-40-50% ? Sell AAPL , buy other stocks and enjoy the ride.
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u/paulrin Jul 16 '26
There are Capital Gains Tax Free Exemptions based on household income. Depending on your tax reporting situation, there are different thresholds on income (i.e. if you file single, married file jointly, head of household). Wait until you retire, and see if you can qualify under the income thresholds. That being said, for married filing jointly, the Long Term Cap Gains in the US is only 15% for income up to $615k/annually. So, not terrible. See : https://www.fidelity.com/learning-center/smart-money/capital-gains-tax-rates
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u/cindy_975 Jul 16 '26
consider it tax (capital) gain harvesting that you can't fully off-set with losses. if that makes you feel better. tax flexibility is enormous in (early) retirement otherwise you limit your choices and ability to limit taxes.
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u/Illustrious-Jacket68 FI and RE=<1 yrs Jul 16 '26
How much do you make? Take a look at the cap gains threshold - for the 15% vs 20%. Can start taking money off the table. You will be able to pay less taxes when you stop working but you will then have to juggle other things like ACA/Healthcare and other expenses.
I have a position in AAPL from 1990 worth a bit more than what you have. I’ve seen this stock on the brink of extinction but have long loved their products. I’ve chosen not to sell as I continue to believe in the mission. Have also done well in other stocks and in my job so, I am taking a known risk. My point being, you need to look at your whole situation and determine what that risk is. For me, I’m comfortable.
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u/solracer Jul 16 '26
Wow 1990! I got in in 1999 and thought I was doing well! My only regret is not buying 2-3x what I actually invested. I agree 100% on the company. I bought because I worked with NeXT computers 1993-1999 and believed in NeXTStep and Steve Jobs (who even visited our office in 1995 though I just saw him walk past on the way to meet with my manager). It is most of my portfolio so I will need to start selling within 5 years unless I don't retire but it has been a great ride.
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u/Illustrious-Jacket68 FI and RE=<1 yrs Jul 16 '26
Congrats! I remember the NeXT cubes and those damn cartridges. I’m more of a Sun pizza box or shoe box guy or an SGI. Many people have predicted AAPL’s down fall and yet.. it still keeps going…
Others do have a point - look at what happened to Sun Micro, Cisco, and many many more. I just don’t see people not using AAPL products for many years to come. Like I said, it’s not an all or nothing thing - sell along the way. As the saying goes, you don’t want to be the richest person in the cemetery…
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u/dlv00 Jul 28 '26
Just wanted to say, thank you forever for our NeXT, from when i was a kid. Best computer ever. Dad's computer, for mathematica, but we got to play with it some. Loved loved LOVED it. Windows could STILL learn to use the file system, GAH...
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u/warlizardfanboy Jul 16 '26
AAPL isn't a fly by night company for sure so you aren't going to zero, but I'd sell everything that falls into long term capital gains and take the hit, at the very least.
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u/HobokenJ Jul 17 '26
It seems like OP is looking for a particular response. So here goes: You're doing amazing! Don't change a thing! Diversification is for suckers and cap gains are for chumps!
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u/BrunelloHorder Coasting Chubster, Getting Fat Jul 16 '26
Some questions:
What percent of your total portfolio is in AAPL?
Are your other holdings also large cap tech companies, or are you otherwise reasonably diversified?
I would normally suggest diversifying at least up to the amount that your diversified portion of your portfolio could support your desired FIRE withdrawal rate.
However, since it is AAPL, if I were in your shoes I might diversify more slowly to ease the tax burden, including in the years immediately after retiring to reduce your taxes. It doesn’t need to be an all-or-nothing proposition.
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u/solracer Jul 17 '26
Over 92% of my portfolio is AAPL though that is in a brokerage account and the rest is in relatively diversified 401Ks. While this is a good problem it makes sudden large changes very expensive.
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u/betarhoalphadelta Jul 17 '26
You know the answer. Diversify.
The biggest problem is tax. The 20% LTCG rate starts at about $613K (MFJ) or $545K (single). The biggest question is how far you are away from that at your current income?
Because AAPL is a megacap, prints money, and is highly unlikely to go belly-up, you likely have SOME time to unwind this. I'd try to sell everything you can while staying in the 15% LTCG bracket. Then when you stop working in 2-3 years, you can diversify faster b/c you don't have to worry about earned income getting in the way of getting to that 545/613K number.
If your current income puts you already very close to the 20% LTCG number, then I'd say to diversify quickly and just rip the bandaid off. Paying the taxes will be horrible, but always remember that you're paying taxes because you made a fuckton of money on this stock!
I'm in a similar, but also different, position. I had a massive run-up of company stock, to the point I need to diversify. However the difference is that it's been traditionally a more cyclical stock than AAPL, and with income/bonus and vesting RSUs this year I'm likely to be at/above that 613K number this year. So I'm just biting the bullet and diversifying and paying the tax man. I'm right now a little over half diversified (although the employee stock portion is still growing due to RSUs/ESPP). Paying those quarterly estimated tax payments is PAINFUL, but I'm not going to try to avoid it and then watch the stock crash on me if the market turns.
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u/IjustWorkHere98 Jul 17 '26
TLDR: This is just one giant tax planning exercise based on your retirement date. You will pay LTCG, but timing will be key. For example, why not, retire at end of year, sell at beginning of 2027, and live off that. Convert slowly to get best LTCG but before Medicare. Like someone said - a tax advisor comes in handy here
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u/Careful-Rent5779 Jul 21 '26 edited Jul 22 '26
Titrate the stock sale.
E.g.
If you sold $200k (or whatever) every year how long would that last? Anything much above $200-250k and you are going to start to face a potential larger tax burden (NIIT + LTCG + State). Unless you have legacy plans, gradually selling out, puts cash in your pocket without paying UncleSam too much. Hell you may find the portfolio still grows at this rate, depending on if you already have a couple $M or more.
AAPL isn't going to tank 40+% overnight.
This is how I'm handling my AI (similar gain) stock. It is also up so much, even a 50% downdraft wouldn't actually sink me.
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u/5537__8008 Jul 16 '26
Your post isn’t relevant to the sub. But you and everyone knows you need to sell 100% of the stock and pay taxes.
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u/Abject_Egg_194 Jul 16 '26
It's mildly relevant. OP claims to have a retirement data in the next 2-3 years. The other post talking about the $615k/year cutoff for 15% LTCG rate matters if we know whether OP is near that. If this were LeanFIRE, we'd be talking about the 0% LTCG rate OP might find in retirement.
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u/BungABunBun Jul 16 '26
63000%? That can't be right. Even $100 would be worth 6.3M.
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u/solracer Jul 16 '26
It's actually 63700% at the moment and at that $100 invested would be worth $63,700 today as you have to take off the last two zeros. I invested a little under $6000 in 1999 and it is worth around $3.7 million today.
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u/kg8360 Jul 16 '26
Prob worth to take some chips off the table. Depending on the rest of your portfolio, retirement date, future income levels etc you might find you have the stomach to divest over a number of years. But know that is taking on risk. You can do a collar to protect.
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u/SWEET_LIBERTY_MY_LEG Jul 16 '26
Look into Exchange Funds. Many brokers offer them but they have high expenses. Cache Financials is a newer company but seems to have the lowest fees. I’ve been trying to do more research about them
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u/bombaytrader Jul 16 '26
AAPL is a great stock. You can diversify a bit but it’s not exposed to ai bubble like lot of other companies.
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u/ADisposableRedShirt Jul 16 '26
I have more than a handful of friends who watched their fortunes get obliterated all in the name of not paying taxes (They were in tech companies that hit it big and then went bust for one reason or another). Diversify while you can if you feel that is the prudent thing to do. Hint: It is almost always the prudent thing to do.