I’m Nervous About Having $1.8 Million in One Stock

Summary

Ramsey Everyday Millionaires

Episode: I’m Nervous About Having $1.8 Million in One Stock
Date: September 26, 2025
Hosts: Dave Ramsey (A), Dr. John Delony (C)
Guest: Steve from Greensboro, NC (B)

---

Episode Overview

This episode features a call-in from Steve, a 78-year-old retiree with a net worth of around $5.4 million. Steve seeks advice from Dave Ramsey and Dr. John Delony about managing a significant concentration of wealth—$1.8 million in a single stock, making up 34% of his net worth. The discussion explores the risks of lack of diversification, the tax implications of selling, and practical strategies for rebalancing while minimizing capital gains.

---

Key Discussion Points

Steve’s Financial Snapshot ([00:21]–[00:52])

• Breakdown of assets:
  • $300,000 in a Roth IRA (mutual funds)
  • $100,000 in a traditional IRA (mutual funds)
  • $1.2 million in an inherited IRA (individual stocks)
  • $3.7 million in a taxable brokerage (individual stocks)
  • $100,000 in cash
• Net worth: ~$5.4 million
• Core problem: $1.8 million is tied up in a single stock, which is 34% of his net worth. The stock continues to grow; however, selling would create a significant capital gains tax burden due to a low cost basis ($58,000).

Risks of Overconcentration ([00:52]–[02:18])

• Dave praises Steve’s financial acumen and discipline.
• He expresses concern, likening the situation to “standing on one leg and somebody’s kicking at your knee.”
  • Quote:

    "One third of your net worth is tied up in one single company. And as it goes, so goes your net worth. That's scary." — Dave [01:46]

• Steve admits to previously reducing his position in this stock within his inherited IRA.

Balancing Diversification and Taxes ([02:18]–[03:54])

• Dave explains that there’s no way to avoid paying taxes when reallocating a taxable account; the only choice is to tradeoff between tax and risk.
• Capital gains rates escalate at higher incomes; keeping income under certain limits (approx. $400,000–$566,000) keeps gains taxed at 15% federally.
  • Quote:

    "You're going to trade some taxes for some safety. Diversification equals safety." — Dave [02:30]

• Steve estimates a $600,000 gain would lead to a combined 25% federal and state tax.

Advice: Systematic Diversification ([03:54]–[06:26])

• Dave advises methodically selling shares each year, keeping annual capital gains under the higher 15% federal tax threshold.
• For Steve (single, $160,000 taxable income), he could liquidate about $400,000 of gains per year without hitting the higher 20% tax bracket.
  • Quote:

    "I'm going to start moving about 400,000 a year over and paying the 15%. And the 15% is not just tax. It's the cost of safety due to diversification versus lack of diversification." — Dave [06:26]

Emotional Risk: Learning from Enron ([05:16]–[05:52])

• Dr. John Delony shares a cautionary tale from the Enron collapse, reinforcing unpredictability in single-stock holdings:
  • Quote:

    "I just get itchy because I grew up in Houston when Enron went away... Sometimes these things are just a vapor, you know?" — Dr. John Delony [05:16]

The Power of Long-Term Investing ([07:08]–[07:26])

• Steve’s success showcases the impact of long-term, disciplined investing.
• The hosts underscore that such outsized gains typically result from “getting in early and just set it and forget it — go slow.”

Final Thoughts: Mutual Funds Over Single Stocks ([07:26]–[end])

• Dave reiterates his aversion to single stocks, firmly advocating for mutual funds instead.
  • Quote:

    "All the data for the rest of us says we buy mutual funds because there's 90 to 200 different stocks in the average mutual fund." — Dave [07:50]

• He warns that single company events (referencing Bud Light, Tesla, Cracker Barrel) can halve portfolio value overnight, something diversification protects against.

---

Memorable Quotes

• "One third of your net worth is tied up in one single company. And as it goes, so goes your net worth. That's scary." — Dave [01:46]
• "You're going to trade some taxes for some safety. Diversification equals safety." — Dave [02:30]
• "If you lost 1.8 million, you would feel that. Yeah. So I don't think you're gonna lose at all. I just could go in half." — Dave [05:07]
• "Sometimes these things are just a vapor, you know?" — Dr. John Delony [05:16]
• "The 15% is not just tax. It's the cost of safety due to diversification versus lack of diversification." — Dave [06:26]
• "All the data for the rest of us says we buy mutual funds because there's 90 to 200 different stocks in the average mutual fund." — Dave [07:50]

---

Timestamps for Major Segments

• [00:21] – Steve provides his financial background
• [01:46] – The risk of overconcentration explained
• [03:40] – Taxes and capital gains calculations
• [05:16] – Dr. Delony’s Enron story and risk perspective
• [06:07] – Dave’s advice for systematic selling
• [07:50] – Mutual fund advocacy and final warnings

---

Conclusion

This episode underscores the dangers of overconcentration—even when a stock has performed spectacularly. Dave and Dr. Delony guide Steve towards systematic diversification, emphasizing calculated, gradual action that avoids large tax hits. Their advice balances realism about taxes with the overriding priority of protecting wealth through broad diversification, using Steve’s story as a compelling real-world case study for listeners of all ages.

Transcript

[A]

This episode is brought to you by SmartVestor. Connect with an investing pro near you at RamseySolutions.com SmartVestor Steve is with us in Greensboro, North Carolina. Hi, Steve. Welcome to the show.

[B]

Thank you, Dave. Thank you for taking my call.

[A]

Sure.

[B]

I am 78 years old, retired, divorced, and have no debt. I have 300,000 in a Roth IRA O in mutual funds, 100,000 in a traditional IRA O in mutual funds, 1.2 million in an inherited IRA in individual stocks, 3.7 million in a brokerage account. In individual stocks, about 100,000 in cash, giving me a net worth of about 5.4 million.

[A]

Way to go.

[B]

My issue today is that in that brokerage, the taxable brokerage account, I have stock in one company with a value of 1.8 million, which represents 34% of my net worth. It's continuing to grow and outlook is good. My tax basis on that stock is $58,000, which means we all subject to capital gains. And I absolutely hate capital gains.

[A]

I don't blame you.

[B]

What would you do? Wow.

[A]

Did you inherit any of this? You said inherited IRA was 1.2. You have the rest of it.

[B]

Other than that, I inherited 250,000 in cash, put it in stocks. I've taken 450 and RMDs and it's still worth 1.2.

[A]

Yeah. Wow.

[B]

The rest of it were just investments.

[A]

You've done amazing, Steve. No one can question. Well, yeah, you were lucky. We were blessed and you were smart, you were working and you were saving money. Money while everybody's suspending it. So I'm proud of you. Good work. Well, I think your analysis, and I don't know what your background is, but it's excellent. Your analysis is excellent. One third of your net worth is tied up in one single company. And as it goes, so goes your net worth. That's scary.

[B]

Yeah.

[A]

That's standing on one leg and somebody's kicking at your knee.

[B]

I can add that. I had some of that same stock in my inherited ra, about a half million and sold that because of the percentage getting up. But everything is in my taxable now in my.

[A]

So here's the thing. You're going to trade some taxes for some safety. Diversification equals safety. Or you're going to take the risk because you don't pay the taxes. It's a simple. There's no way around it. You're going to pay the taxes. If you liquidate this because it's not in any kind of a protected account. There's nothing you can do a roll on it. There's nothing like that. You just are just going to take the hit. You know, I would not do where the. I would not do enough where the taxes activate me above 15 had come. Your income may already be over 400k though. Is it?

[B]

No, no, it's actually not. My taxable income this year is basically going to be RMD from that. And, you know, I'm expecting about 160,000 taxable income this year.

[A]

Okay. All right. Well, if I remember correctly, and I'm trying to pull up a cheat sheet because I can't. I don't have it. The max on the capital gains is 400 or somewhere right around there. If they had moved it up, it was 400 before you get kicked. Have you looked that up yet?

[B]

I plugged in just arbitrarily about $600,000 capital gain in that, and it came out to about 25% federal and state tax. I would pay that.

[A]

Well. Okay. Because if you go above 400, it goes from 15 to 20 on federal. And I don't know what your state has, but it must be five, apparently.

[B]

I'm not sure.

[A]

So if you keep it under 400 and you rolled 400 inside of. Keep your total income under 400 or whatever the number is. I'm not a tax guy, obviously, but I'm going to move up to the 400 mark. The 340,000 or whatever I can move, or 240,000, whatever I can move to not get above 400. And I'm gonna start gradually moving this at 15% because I don't like the risk of the lack of diversification. It's painful to rebalance your accounts, but you're gonna take the risk if you don't. And you're looking at that company going, I'm really, really like you. If I. Because I'm. I'm gonna. I'm gonna be over there eating in their lunchroom, seeing how people are doing.

[B]

I've heard you ask before if someone would. If their life would change, if maybe they lost certain amount of money or whatever.

[A]

Yeah.

[B]

And if.

[A]

Yeah, if you lost. If you lost 1.8 million, you would feel that. Yeah. So I don't think you're gonna lose at all. I just could go in half.

[C]

Well, Steve, I've got. Steve, I got. I just get itchy because I grew up in Houston when Enron went away and I had friends and family that worked at Enron. And man, that just makes me nervous. Or just thinking about what Tesla was a year ago versus what it is right now. Everyone can. It's just so easy to think this one's got a good upside to it. And man, my, my lived experiences, sometimes these things are just a vapor, you know.

[B]

I understand. I know nothing's assured. I don't know what. They'd do you any good to know the company that I've.

[A]

No, no, because it doesn't matter. I don. Well, it sounds like I'm trashing just that individual company and I'm not. I'm trashing the last. Diversification.

[C]

Yeah.

[A]

Yeah.

[B]

Okay.

[A]

Yeah. I'm going to start systematically moving out of this. I'm not going to panic and pay the over 20%. See. Are you married, filing jointly or saying. You said single, didn't you?

[B]

Single. Divorce, Single.

[A]

Okay. You got. I just pulled it up while we were talking because I didn't know. It's up to 566,000 now. Okay. That you can move. And so if you've got 160, that leaves you 400 that you could move a year and still not be accepted. 15%.

[B]

Yeah.

[A]

Because you got a $58,000 basis. So it's pure gain, basically. So yeah, I'm going to start moving about 400,000 a year over and paying the 15%. And the 15% is not just tax. It's the cost of safety due to diversification versus lack of diversification. And that's the way I'm going to look at it. I don't want to be that deep into one company and so. Good question though. Wow. Congratulations. Still, I mean you've done a lot of obviously very smart things and at 78 you're calling us that question. That's a pretty technical, ticky, tacky question and it shows you really know what the flip you're doing. Congratulations. Very neat. Very neat.

[C]

That also shows to all the 26 year old George calls him the Instagram Bros. It's just dedicated time. Just time. Small amount over time.

[A]

Yeah.

[C]

But that at 56k and it's 1.8 million. That is just getting in early and just set it and forget it. Just go slow.

[A]

Yeah. I mean there's not a. I can't think of a publicly traded company that's a household name. Well, I don't know when he bought it at 58. That's the other thing that would give you that in a short period of time.

[B]

Right.

[A]

It's not going to go to 1.8 in a short period of time. I know there's not one on the big board on The New York Stock Exchange. There's not one machine.

[C]

I had a friend who worked it in a video the day of or something.

[A]

Yeah, I don't know if you could get it on that one. You know, your wife was in Congress or something.

[C]

There you go.

[A]

That'd be helpful. But you know, that kind of stuff. But you know, the. That's the only way you're going to. I don't know. I don't know if a stock has done that. I don't buy single stocks, folks. And lack of diversification is one of the reasons. All of the data, even though Steve has done incredibly well and I do congratulate him, all the data for the rest of us says we buy mutual funds because there's 90 to 200 different stocks in the average mutual fund. If you had 1.8 million and 90 to 200 stocks, you'd be perfectly safe compared to. You've bet 34% of a $5 million net worth on one singular company's behaviors. They can make the decision to do anything stupid, and suddenly you could have a Bud Light moment in half. Yeah, I mean, it could be a.

[C]

Tesla moment or any Cracker Barrel moment. Right now, like any of them, you.

[A]

Can see the stock just nosedive. Yeah, yeah, you can have all that. And I don't. I don't. I don't want that. I don't have control over that. So I'm not putting my money in that.