The Company Stock Factor

Your company stock can become an overly large portion of your
investment portfolio simply because it's easy to think of the
individual stocks you own—especially company stock that may
accumulate as part of an incentive program—as separate from
your fund holdings.

The first step to reducing the amount of company stock you own is to calculate how much of your total equity holdings your company stock represents. Pool the value of all of your investment accounts—both tax-deferred and taxable—and include any profit sharing or stock purchasing programs offered by your employer. Also check whether any of the mutual funds in your portfolio hold shares of your company's stock.

If your employer's stock accounts for more than 5% to 10% of your holdings, consider making one or both of the following adjustments:

If you are close to retirement age, speak with a tax advisor about "net unrealized appreciation" (NUA) before you sell any shares.