Too Much of One Stock? How to Diversify Without Blowing Up Your Tax Bill (SB1843)

Summary

Podcast Summary: The Stacking Benjamins Show

Episode: Too Much of One Stock? How to Diversify Without Blowing Up Your Tax Bill (SB1843)
Date: May 18, 2026
Hosts: Joe Saul-Sehy & Josh ‘OG’ Bannerman, CFP

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Episode Overview

In this episode, Joe and OG tackle a common, yet complicated, financial challenge: what to do when you find yourself with too much of a single stock in your portfolio. Whether the oversized position comes from company compensation, inheritance, or a big bet that paid off, the episode dives into strategies for diversifying effectively—without creating a tax headache or taking on more risk than you realize. They break down the behavioral traps, tax implications, and practical step-by-step strategies for unwinding concentrated positions and discuss broader lessons about insurance and risk management in the basics segment with Anna.

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Key Discussion Points & Insights

Why Does Overconcentration in One Stock Happen?

• Sources of Concentration:
  • Employee compensation (RSUs, ESPPs, stock options)
  • Inheritance
  • Investment conviction (“true believers”)
  • Sudden growth of a formerly small position (e.g., early Nvidia, Amazon)

“Sometimes people wake up...and all of a sudden, for a number of various reasons, you’ve got way too much ice cream, AKA way too much of a single company stock in your portfolio.”
—Joe, 04:51

Risks of Holding Too Much in a Single Stock

• Single Company Risk: Compared to diversification (like the S&P 500), a single stock exposes you to the risk of losing a large chunk of your retirement if something goes wrong (e.g., Merck/Vioxx, Enron).
• Behavioral Bias: Emotional attachment to a company can cloud judgment (“These are good people… We’re making really good drugs…” —OG, 18:49).
• Compensation Double Risk: If you work at the company, both your paycheck and your investments are tied to the same ship ("That’s not diversification, that's loyalty points. That’s beyond loyalty points." —Joe, 17:10).

Behavioral Traps & Emotional Attachments

• Insider Optimism: Employees often believe they know something special or have insider optimism that leads them to overcommit.
• Loss Aversion: Fear of taxes or missing further upside can paralyze action.
• Goalposts Move: Expectations of high returns from an individual stock often exceed market reality (see Edelman anecdote on expected returns, 21:44).

Step-by-Step Strategies to Diversify

1. Slow Unwind (Dollar Cost Averaging Out)

• Don’t fall victim to all-or-nothing thinking; you can sell in increments.
• Insider employees and executives must often diversify gradually; you can mimic this.
• Choose a cadence: monthly or quarterly systematic sell plans are recommended, especially if you’re still accumulating more via compensation (29:12).

“You can dollar cost average out… you set up an established plan: no matter what, I’m going to do this. And it works really well because at the end of the day, when you got into it, that’s how you did it.”
—OG, 25:30

• Question to ask: “Which one would upset you the least: selling all at once and missing upside, or selling slowly and riding it down?”

2. Be Tax-Aware

• Inherited Stock: Step-up in basis reduces taxable gains. If you inherit stock, diversify soon—"there's no excuse" to stay concentrated (12:48, 32:04).
• Spread sales across tax years to manage brackets; in low-income years, you may pay less.
• Offset gains with losses if possible.
• Trade-off Analysis: Sometimes paying a higher short-term capital gains rate is worth reducing risk sooner (36:57).

3. Surround, Don’t Sell (Build Around Concentration)

• Direct new investments elsewhere instead of adding to the concentrated position.
• Caveat: If the position is large and growing, you likely can’t keep up with its dominance (see Grant Sabatier/Amazon anecdote, 39:56).

4. Set a Maximum Position Limit

• Be explicit and pre-decide: set a cap (e.g., 10%, possibly 15%) on any single investment.
• Above this, systematically trim.

“Anything over 15%, you’re really asking for it.”
—Joe, 40:43

5. Advanced Options (for Very Large Positions)

• Protective option strategies, exchange funds, or structured products (43:18).
• Weigh complexity and cost: "Sometimes the juice isn’t worth the squeeze... Probably just sell it."

6. Mindset: Reframing Success

• Diversification protects the success you achieved—it’s not “giving up” on future upside, but ensuring “one decision doesn't define everything from here on out.” (42:32)

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Notable Quotes & Memorable Moments

• On Emotional Attachment:
  "People have an allegiance to the people they're working with and believe that the people they're hanging out with every single day are working toward a good outcome. ... I don't care if you ship another box of widgets. The only thing that's gonna be rewarded is if you're profitably doing that."
  —OG, 18:49

• On the Tax Dilemma:
  "The worst part about that wasn’t even the fact that it went down 75%. ... You still had to pay taxes to get rid of the 25% that was left."
  —OG, 10:27

• On Inheritance and Step-Up in Basis:
  "If you inherit stock, there's really no excuse to not be diversified because there's very little tax bill associated with that, generally speaking."
  —OG, 12:48

• On Making the Plan:
  “Which one of these things will piss me off the least?... Make the plan when you’re clear-headed, not when the stock’s going up or down 20% a day.”
  —OG, 43:18

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[BASICS SEGMENT] Insurance & Risk Management

(Starts ~48:59)
Hosted by OG and Anna

Four Key Types of Insurance:

1. Life Insurance:
   • Cover debts, college for dependents, and lifestyle continuity (multiply core expenses by 25 for the “4% rule”).
2. Disability Insurance:
   • Employer coverage is typically only on base salary; fill the gap, especially for those earning bonuses/equity.
   • Pay tax on premiums (if possible) so that benefits are tax-free.
3. Long Term Care Insurance:
   • More relevant for those 50-60; earlier is cheaper but paid longer.
   • May not be needed for those with very high/very low net worth.
4. Property & Casualty (including Umbrella):
   • Bundle policies to save, and ensure you’re covered at least up to your net worth.
   • Raise deductibles to save premiums if you hold a strong emergency fund.
   • Audit and clear out outdated or unnecessary policies.

"The goal isn't to have more insurance. The goal is to have the right insurance..."
—OG, 60:33

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Timestamps for Key Segments

• Primary Discussion: Diversifying Single Stock

  • Why overconcentration happens: 04:51–14:47
  • Risks & behavioral traps: 10:27–22:42
  • Strategy #1 (Slow unwind): 23:54–29:12
  • Tax-aware moves: 31:37–37:37
  • Building around the stock: 38:33–39:56
  • Setting limits and mindset: 40:43–43:18
  • Advanced strategies: 43:18–45:35

• Insurance Basics Segment with OG & Anna:

  • Introduction to risk areas: 48:59–49:55
  • Life insurance: 50:42–53:52
  • Disability insurance: 55:03–57:13
  • Long term care & P&C: 57:13–58:29
  • Saving on premiums: 59:02–60:33

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Actionable Takeaways

• Have a plan to diversify.
  Don’t let inertia or emotion tie your future to one stock, even if you “love” your company or had a big win.
• Understand your tax position.
  Inheritance offers tax advantages if approached strategically.
• Think in systems, not just events.
  Dollar cost average out, and avoid the paralysis of aiming for the mythical “perfect” exit.
• Review your insurance.
  Proper risk transfer is a cornerstone of solid financial planning—not an afterthought.

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Final Reflections & Personality

Throughout, Joe, OG, and Anna keep the tone light, peppering in wit and personal anecdotes (“It's amazing how many quarters you can put in this bed…” —Joe, 01:42) while making potentially overwhelming topics approachable and actionable. The episode balances practical to-do’s with a healthy respect for behavioral finance, making it especially valuable for listeners juggling equity compensation, inheritance, and real-world portfolio management.

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Recommended next step:
Share this episode with anyone holding significant company stock—and revisit your own risk management and insurance strategies.

Transcript

[A]

Dish has been connecting communities like yours for the last 45 years, providing the

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Watch live sports news and the latest movies, plus your favorite streaming apps, all in one place. Switch to DISH today and lock in the lowest price in satellite TV, starting at $89.99 a month with our two year price guarantee. Call 888-add-D dish or visit dish.com today. Tired of overpaying with DirecTV? Dish offers a reliable low price every month without surprises. Get the TV you love and start watching live sports news and the latest movies, plus your favorite streaming apps, all in one place. Switch to DISH today and lock in the lowest price in satellite TV, starting at $89.99 a month with our two year price guarantee. Call 888-add-d dish or visit dish.com today it is Monday. It's a weird Monday when I'm not in the basement. I'm in Charlotte, North Carolina, and I have. I don't even have guys. I don't even have a mug. For our Monday salute, I've got bottled water.

[C]

Wow. Times are tough in North Carolina, huh?

[A]

It could be vodka. You don't know. You don't know.

[B]

Are you at a We work. Is there somebody in the. In the background?

[A]

I met a wework called the Hyatt.

[B]

Did you run out of money and you had to share a room with somebody?

[C]

He's at a hotel that has lots of mirrors, Og so you do the math.

[B]

Oh, it's a mirror. Yeah. Okay, I got you. Well, I was waiting for. I was waiting to see something move, but it's the opposite. Okay, I see how mirrors work.

[A]

It's amazing how many quarters you can put in this bed. By the way,

[C]

Is there a vending machine in the bathroom, Joe?

[A]

Apparently if I stay here three nights, I have to tell Cheryl that I got married to somebody else. I don't know. Hey, we need to do our salute, though. Just because I'm not in the basement, you guys are. I'm so jealous. Let's raise our mugs, everybody, and salute. The troops have been working double, triple, quadruple duty lately, keeping us safe for all you do. On behalf of the men and women making podcast in Mom's basement usually, or in Charlotte, North Carolina, this week. And the people who are all trying to stack. Benjamin, thank you very much for all you do.

[C]

Thanks, everybody.

[A]

It's easy to grin when your ship

[B]

comes in and you've got the stock market beat. The man worthwhile is the man who

[A]

can smile when his shorts are Too tight in deceit.

[B]

Okay, Pookie, do the honors.

[C]

Live from Joe's mom's basement, it's the Stacking Benjamin Show. Foreign. Doug. And millions of stackers are becoming investors through stock plans, inheritance, and big winners. But many are accidentally taking on massive risk. Today we'll show you how to turn concentrated stock into a diversified, confident plan. Plus, it's Monday, so that means Og and Anna are back with their second basics lesson of this eight weeks. And of course, that's not all. I'm also ready to swoop in halfway through to regale you with another piece of trivia, this one about insurance clauses. Oh, man, who doesn't love insurance clauses? You're going to love it. And now, two guys who are loving the fact that Joe's mom made two pots of coffee. It's Joe and O. Jj. Jj.

[A]

And a happy Monday to you stackers. I am Joe Salsihai and Doug, two pots of coffee. And I'm not even in the basement with you this week, so no wonder your open was maybe a little more exuberant.

[B]

I. I do have a little problem, though. Doug, did you notice that Joe left his empty ice cream bowl sitting on his side of the table? Like, he does that. It's like, what the heck, bro? If you're gonna go on vacation, like, clean your trash and then the stuff

[C]

just like glues itself to the side of the bowl. You got to let that sit in the. Over in the utility sink for like a day and a half to soften it up.

[A]

See, this is what happens when I'm not there to defend myself. I like how you take your empties and call them mine. It's. It's super awesome.

[B]

I mean, who eats a bowl of ice cream for breakfast?

[A]

Let's take this idea of a bowl of ice cream. Let's say that you were going to eat a whole grocery store freezer full of ice cream. Because sometimes people wake up OG and all of a sudden, for a number of various reasons, you've got way too much ice cream, AKA way too much of a single company stock in your portfolio. And today we're going to talk about what to do when that happens. How about that?

[B]

I like it. I like it a lot.

[A]

It is a great problem to have. And hopefully at some point in all of our stackers life, you're dealing with this problem.

[B]

Oh, my gosh, I have so much money.

[A]

What am I going to do with it all? But, but you got to admit, oh, gee, we see it enough among our stackers. We hear about it enough that I think it's important to know what you could step in.

[B]

I got a little preview of what we're going to talk about. So I know on the back end we'll talk about like how to get yourself out of it and then more specifically, you know, how not to get yourself into it. But this is a structure that you want to have from your investment perspective on the front end of your investment plan, not on the back end of your investment plan of like, oh crap, now what? Oh crap, now what? Is never a good feeling to have, you know, when you're, when you're working through your money.

[A]

So grab a piece of paper, whatever you used to take notes, sit back and relax because we are about to help you make sure that you stay diversified and keep your portfolio humming along. We've got a couple sponsors speaking of humming along, who keep us humming along. We're going to hear from them. The first one is the Vault. I solved another subscription problem, saved myself about $250 a year OG by looking into the subscription manager of course got rid of all of those places where my data was being sold, made sure I was wiped clean of that. And coming soon, we're going to be talking about budgets and budgeting using the vault. Stackingbenchments.com vault gets you there. And super happy to see that for people that have been there a while, we're adding new functionality and not increasing the price. My goal is to be involved with products that I want to use and the Vault is simply just something I really, really enjoy going in. And, and in the next couple weeks I think our Vault users are going to like it even more. All right, we have a couple more sponsors help us keep on keeping on. We only have sponsor spots here and in the middle of Doug's trivia halfway through the show, that's it. So we're going to hear from them and then OG Doug and I, we're going to help you make sure that your portfolio stays diversified as you hear this. I just got back from keynoting the Millionaire Money Mentors conference in Florida. I'm sure I had a great time even though I haven't gone yet as I record this. But I know wherever any stacking Benjamins people are, it's always a party, isn't it? But what makes it even better party is the fact that when you see pictures of me, those clothes came from quints. I've been getting intentional lately about what I wear day to day and on stage and leaning in more into pieces that feel easy, that are comfortable, that I can travel with and still look put together. It just makes getting dressed simpler. Whether I'm at home or on the road, Quince has been my go to. The fabrics feel elevated, the fits are clean. Everything just works without needing to overthink it. Quince has all the wardrobe staples for spring. Think 100% European linen shorts and shirts from $34. Lightweight, breathable and comfortable, but still look put together and clean. 100% Pima cotton tees with a softness that has to be felt. Their pants also hit that same balance. Relaxed and comfortable, but still polished enough to wear pretty much anywhere. Everything's priced 50 to 80% less than what you'd find at similar brands. So Quince works directly with ethical factories and cuts out the middlemen. So you're getting premium materials without the markup between the pants that feel so incredibly comfortable. And my favorite is still that first cashmere sweater that I got. It is so nice. It's great to feel good because you know that your wardrobe looks good and it didn't cost anywhere near what I thought clothing that looks like that would cost. It should be the same for you. Refresh your everyday with luxury you'll actually use. Head to quince.comsb and because you're a stacker, you'll get free shipping on your order and 365 day returns. That's Q U I N C E.comSB for free shipping. 365 day returns. Quint.comSB. Well, today, stackers, we're going to dive into a problem that feels a little bit like winning a lottery. Until you realize that the lottery ticket also represents an oversized piece of your entire retirement plan. You wake up, you check your portfolio, and all of a sudden you think, wow, I got a lot of that blank stock, whatever that might be. Then, of course, mom reminds us what happens when that thing drops. And the bad news is, oh, gee, you and I both have seen this where somebody has had too much of an individual stock and it's, it's dropped in value during the time between you started thinking about doing the right thing and diversifying it. You actually got around to doing it. And that's never, that's never pleasant.

[B]

And the struggle, of course, is then, you know, it's like, is now the right time? Because it's gone down and maybe I want to wait a little bit. I distinctly remember many years ago, a client came in. This was a long time ago, early 2000s, and they had all of their company stock was. They worked at Merck. And so it was, you know, their entire portfolio was Merck stock. And then this little thing called Vioxx came out and stock went down 75% or something crazy. And the worst part about that wasn't even the fact that it went down 75%. It was, it was that you still had to pay taxes to get rid of the 25% that was left. All because the diversification was too hard or too challenging or the tax bill was too much or whatever the problem was along the way. So owning individual stock is a great way to be concentrated and great way to make a bunch of money. It's also a great way to lose a bunch of money really quick.

[A]

It is, and I'm glad you brought that up to start off with because if your goal is to get rich quick, you just increase the volatility in your portfolio. Right? But generally what you find, unless you are one of the four people running the company, I'm looking at Enron from the early 2000s where there were literally maybe four people who knew really what, what a house of cards Enron was. Unless you're one of those four people, betting everything on this is a difficult place to be. But clearly fortunes have been made by keeping just a single stock and they've often been lost that way too. So more people than ever are becoming investors for the first time. And part of it is compensation through work. So maybe you're listening to this and you're a stacker and you just got restricted stock units or you have an employee stock purchase plan or someh you've gotten some stock. But there's also, there's also other ways where concentration, you know, you didn't choose to be concentrated stock. Maybe concentration shows you right. So first one is through your workplace. Second way you might have got there was an inheritance. Oh gee, we've seen that from time to time. I remember when I was an advisor a few times people came into my office and they said, hey, I've never owned stock before and grandma died and now I have all this general motor stock and I don't know what to do with it.

[B]

I mean, that one in particular, just to put a pin in that one for a quick second, there's no excuse for not being diversified. If you inherit stock, like there's no reason not to do it.

[C]

So just to clarify, OG you mean you said there's no reason to not be diversified. If you inherit, does that mean as soon as you get it, you want to either yourself or ask your advisor to split that up and diversify the net.

[B]

Maybe we'll talk about it in a little bit, Doug, but I like. Maybe I like your foreshadowing.

[A]

I do.

[B]

Stay tuned for more particulars around what to do with your inherited stock.

[C]

So you're saying I'm that annoying guy that figures out the plot of the movie soon and tells everybody like six

[B]

minutes in, you're like, oh, it's the mistress. Wait, what? How did you know that? No, I could see this a mile away.

[A]

Number three is, remember back in the early 2000s OG, when Nvidia stock was going nowhere and it was just kind of this crappy computer card company?

[B]

Nobody remembered Nvidia back in 2000. Nobody knew it existed. It wasn't a thing.

[C]

Joe, you and I remember Nvidia back in those days because we were talking about which graphics card to get to upgrade our PC for racing games, Right?

[A]

That was what Nvidia was. That's what it was. And I remember reading reports on Nvidia going, yeah, you don't want to own the stock. And now let's say that you bought Nvidia back in 2012 or 13 OG, and all of a sudden Nvidia owns you.

[B]

Right? That's a good problem to have.

[A]

Yeah. And then number four is, and I have a couple relatives that did this. They had conviction around specific companies or specific ideas, and now they have heartburn because of the fact that they own too much of a good thing. Like. Like. No, no, no. I really, really, truly think, well, in one case, one relative, it was bitcoin, just really believed in the use case of crypto and now has just a ton of crypto. Not because they were hoping to get rich, but because they just thought cryptocurrency was the way of the future.

[B]

Do you think that some of that is a little bit more generational? And what I mean by that is, you know, you look at the history of investing from largely individual stocks to pretty good mix of individual positions and mutual funds to maybe like a third, a third, a third to now include ETFs. And then now at a quarter way through this century, I certainly don't know the percentages, but it feels like it's mostly ETFs with a smattering of mutual funds. And then occasionally you have some individual stock. And I feel like 30 years ago it was, I have a lot of stock. And the conversations were like, hold on a second. Why don't you just put this all together in one line item? Although there is now the breaking apart of the ETFs which is an interesting dynamic. So some of this maybe is a little bit more generational, but I suspect. And so thinking about your, you said your family members conviction around it. I mean, that was the thing. Invest in the companies you do business with. Right. Like, invest in what you know. So you had a lot of people in Michigan that had Ford and General Motors and Dow.

[C]

It's Ford's.

[B]

Yeah, I'm aware. That's why I didn't say it that way. And the companies that are headquartered or employed there, and I suspect is probably somewhat still true, just maybe shifted to tech companies now. But I wonder if this is a problem that's on its way out. I don't know. Interesting to think about.

[A]

Well, I think for all those reasons above, people will sometimes hold. I think the conviction area we see a lot less because I think we realized, oh gee, just how risky it is. And I, and I want to go over just because it isn't risky in one way. Like, you know, so far we've been talking about single company risk. Right. You own one company versus owning 500 in the S&P 500. That's, that's a big risk difference. If one company goes through the floor, your whole retirement goes with it. But also if you got this through work. Let's talk about those people at first. If you're loading up on company stock because of your workplace, if your paycheck and your portfolio depend on the same company, I mean, that's not diversification, that's loyalty point. That's beyond loyalty points.

[B]

Yeah. There's an incentive to do it. The espp, the employee stock purchase plan, usually get a discount of some kind for owning company stock or purchasing company stock. You get a tax incentive for owning company stock in your workplace retirement plan. If you do it right, there's a tax incentive there.

[A]

And they also make it super easy to buy it.

[B]

Yeah.

[A]

Because just for sure, they roll deduction.

[B]

Yeah. And then nowadays, like you kind of alluded to earlier, nowadays even part of your compensation is company stock, which can be good, you know, if you're in the, in the, you know, in a position to help row the boat, so to speak, you know, what you're shipping. But also can be frustrating if you are on the other side of it and you're like, I'm good, I'll take. My friends call me cash. I'm gonna take that. I don't need any of that incentive stock option nonsense. I don't know where this thing's headed.

[A]

Hard pass. There's Another risk OG that I think we need to talk about. And this is the risk of your behavior because you don't see with an index fund somebody go, ooh, when my total stock market index hits whatever the next number is, that's when I'll sell, right? So we don't have all these like, I don't know, preconceived ideas in our head about, well, heck, the stock is about to, they're about to have quarterly earnings for the S P500. So I'm not going to sell this index or small cap index or international, whatever it is. Like, we don't get emotionally tied, which I think is a great thing. But man, when it comes to clients with individual stocks, you must see people that are emotionally attached to a bunch of these positions that they own.

[B]

Well, I think emotionally attached is, is, is a strong way to think about it. More people, I suspect, believe that they have some sort of insider knowledge. And I don't mean insider knowledge in terms of bad insider knowledge, but insider knowledge of like, no, you don't understand. Like, these are good people, man. We're, we're making really good drugs here. Or we're going to have this new technology tool that's coming out or we've got this new, you know, whatever. Even if it's not non public information that is true insider info. People just have an allegiance to the people that they're working with and believe that the people that they're hanging out with every single day are working toward, you know, a good outcome. And I think that people are like, well, you just don't understand. Here's what we're doing that's special. And then from an outsider perspective, Joe, yours or mine or somebody like us, we're like, what do we care? I don't care if you ship another box of widgets. The only thing that's gonna be rewarded is if you're profitably doing that. And to your point, it's super concentrated to your risk profile. So why would you want to do it that way? But there's good reasons to, right? We talked about concentration gives you a great opportunity for wild wins. And there's plenty of success stories along the way that say, hey, Jeff Bezos didn't become a billionaire because he bought A S&P 500.

[A]

He was diversified, right?

[B]

I mean, he might be diversifying presently into like yachts and stuff, but I think that's not a fair example either because he took all the risk of starting the organization. That's a different kind of risk. But nevertheless, man, if you can make

[A]

a fortune through what you do do through your paycheck and really shovel money into your portfolio that way, I mean, that is a great way to win because you know what you're doing. You understand the threat to your payroll. So working on that part of your portfolio, which people don't often talk about. Right. We talk about a lot here, how to be better at work. Because you and I believe that that skill is an asset that you are accumulating, much like you'll accumulate stocks and bonds. The interesting thing OG about what you're saying is, you know, also, when it comes to an index fund, we think of practical numbers. I mean, our average stacker knows what the stock market goes up in an average year and what our expectations are for the portfolio. But I think back to one of the formative books that I read, which was Rick Edelman's the Truth About Money. And he said, when it comes to individual stocks, we get these outsized feelings in our head. So, Doug, without thinking about it too much, let's say you have a random stock. I'm not even gonna tell you what stock it is. It's trading at $10 a share. What price does your head immediately go to? That would be a nice return to sell it. Let's say later on this year, probably 13. Yeah, yeah. 10 to 13 would be nice. The average person says 15. That's a 30% return that you said.

[C]

Yeah.

[A]

And that's why market expectation that, well, no, you're like, three bucks. That's not a big deal. But then Rick points out that it's a huge deal. Like, in our head, you get a Stock that's at 40, and you're like, okay, it gets to 50. That's a 25% return that you're talking about. I gotta stop trading at 5. I'll sell it when it gets to 8 or 9. Like these returns that we expect from individual stocks, just because we're attached to the number and not really thinking about what the stock market does in an average year gives us this expectation that might be bigger than what we could hope to achieve. And that's a risk that we have as well.

[C]

If you change that example to, say, Rivian stock. And what would I be excited about to sell it would have been $10.13, please.

[B]

God did tell you when to sell it?

[A]

He did.

[C]

You did. You tried to tell me.

[A]

If only you'd had some insight from somebody who was talking in your ear.

[C]

I thought I did.

[A]

I want to talk about five things that maybe should be in your, your playbook. And oh gee, I want to run these by you because as I thought about these, I thought, oh, oh gee, will have some more. And as usual, if you're brand new to the greatest money show on earth here that we haven't shared with OG any of the pieces that we have thought about. So the first thing that was on my list, OG was this idea of a slow unwind, which is I think people think that when you own a concentrated stock, I gotta sell all of it or none of it. And that's not true. You can just like people dollar cost average in, you can dollar cost average out. And I think about insider traders with these major corporations. You can go to cnbc.com or Yahoo Finance and you'll see that insiders have to display how they buy and how they sell stock so that we can all follow them. And oh gee, you'll often see people that are on a quarterly basis. You can see it's part of the financial plan because once a quarter they're dropping another X number of shares is they're diversifying out as the company's giving them more. This is a strategy I'm sure that you use from time to time.

[B]

Well, I think, you know, kind of like looking back at this from the perspective of like, how did we get to this spot? You know, and I think we'll circle back and talk about that. But this is like, okay, I've now I already have the problem, right? So there's stuff to do before you have the problem. But okay, so we have the problem. So how do we rectify the situation? And certainly one of the options is you just sell it down to whatever allocation you want to have. And to be fair, I don't know that that's a terrible idea most of the time. The risk, of course, is that the Stock goes up 30% like Doug thinks it should, and you miss out on a big gain. But I suspect there's an equal risk of it going down 30%. And, you know, you're preventing yourself from a big loss. I will tell you that no matter what you choose to do, it's going to be wildly incorrect because that's just how Murphy's Law works. You know, you're going to, you're going to be like, you know what? The right thing to do is diversify it all. And tomorrow after you sell it, it's going to have a, you know, surprise, whatever dividend and you're going to miss out or something like, funny you say

[A]

that, OG because when I was an advisor, I would tell my clients when we were in this situation, okay, we've got two choices. We diversify out slowly and it just continues to be this giant sucking sound. And it gets bad news and it goes down and down and down and you lose out on a bunch of money that you would had if we sold it all at once, or we sell it at once and it goes through the roof two days after we sell it.

[B]

Right.

[A]

My question was not which one do you prefer? Because we all want the better one. My question og always was, which one would upset you the least of those two? Because no matter which one we choose, there's a chance we'll be wrong.

[B]

Yeah, it's gonna suck regardless. No matter which one you pick, you're gonna be in the short run, wildly incorrect, and feel frustrated by that. So then the other option, to your point is you just say, okay, well, I don't wanna sell all of it today because there's other downstream effects, maybe some tax problems or whatever. And so you set up an established plan of like, no matter what, I'm gonna do this. And it works really well because at the end of the day, when you got into it, that's how you did it. You know, a lot of people ask the question, just kind of take this step further, say, well, you know, I'm going to get close to retirement. How do I take the money out of my investment accounts? Well, this is going to come as a shock to a lot of people. Kind of the same way you put it in, like every single month for 30 years, and now you're going to take it out every single month for 30 years. And that is the most logical way to do it. It keeps the money invested the longest. So you have two ways to do, you know, kind of rip the band aid off, which is probably right to solve that problem. What's a greater problem? A tax bill or wild? You know, over diversification or under diversification? I'd say under diversification is worse. But if you can't stomach it, then set up a plan for, okay, I'm going to sell the same number of shares at this same cadence until I'm to the position size that I want. And especially if you're somebody that's accumulating it on one end, you're pouring money, you're pouring shares on the top end, and you're trying to drain it out the bottom end at the same time. This is very critical because everyone who's in this spot knows this to be the case because we Talk about it when they're early and they go, that'll never happen to me. And then it happens to them and they go, hey, you told me this was going to happen to me. It's like, yep. So here's what happens. You start getting some RSU's, you start doing some ESPP purchases, you get some incentive options or non qualified, and they're all kind of worth just a little bit of money. And it looks cool on your balance sheet that you got all these shares, but they're not really worth anything because they're not vested or whatever. But next year they go, hey, you did a good job, here's a couple more shares. Hey, you did a good job, here's a couple, oh, you got a promotion. We're going to give you these options and some more shares. And as you move up in the company, as your career progresses, more and more of your compensation is aligned with corporate outcomes and less aligned with what you do on a daily basis. Which makes sense. The CEO, while they're paid, you know, an insane amount of money cash, right? Two million bucks or something, you know, we'd all go, that's a lot of money. Jamie Dimon doesn't make his money on his cash, right? He gets like 2 million bucks. That's like, that's the money he like buys booze with. What he makes money on is the fact that J.P. morgan's stock, he owns $100 million of it or 500 million something like insane amount of J.P. morgan stock. That's where his compensation is really driven. And so as your career progressive, it goes from working per hour to working for outcomes.

[A]

Well, think about how that aligns too, because as a shareholder, you want that. You want that?

[B]

Absolutely. You do. 100%. Yeah, 100%. You do. So if you don't have a plan for, I'm pouring stuff, you know, I'm filling up the top of the bucket, but I don't have a way to like drain it out the bottom. You're going to run into this problem where you're going to be putting more stuff in the top than you're pulling out the bottom along the way. So if you find yourself, you're like, okay, today's the day I want to do it. Establish a systematic sell order. Say, I'm going to do this on this frequency. It can be weekly. I wouldn't do daily. I probably wouldn't do weekly either. Monthly, quarterly, you know, and if your company has restrictions now, you're going to be restricted around the times that you can do that as well. But pay attention to that. But you put it in on a quarterly basis with your bonus. Take it out on a quarterly basis. Like this is, this is an easy, easy decision. And if you have the option to pick which shares or which lot, you know, maybe it can be some tactical stuff, but that's 201, 301.

[A]

I like this. With the employee stock purchase plan especially think of it as a conveyor belt. We're just trying to get that 10% discount. Hold on to some of it, a little bit of it. So we own a little bit in our company and then sell it on the way. So whatever I buy during this six month period, I sell an equal amount on the other side. So I'm always conveyor belting in. I get the free 10%, I'm conveyor belting some off. And then I'm constantly.

[B]

Yeah, there's a two year rule on the tax benefits for espp, so. So yeah, you'd, if you were starting from scratch, you'd go like Q1, Q2, 3, 4, Q1, Q3 of year two, and then Q1 of year three. You'd sell Q1 of year ones, tranche. So you'd put money in, take money out, put money in, take money out. You know, because look, this is the thing. When we talk about RSUs, maybe we'll get to this. This is your compensation, right? Like, this is your paycheck. And it's really interesting to me when people are like, oh, I'm gonna hold onto this stuff. It's like, okay, well let's flip this around the other way. You just got a bonus from work. It's $50,000 cash. Is the first call to OG to go, hey, let's buy my company stock with all of it? Or do you think, well, hold on a second, there might be other things. Like, I've got other financial goals. I wanna pay off my house faster, I gotta send my kid to college. You know, I got to build my investment portfolio. I need to pay off some consumer debt. Like, are there other things in your life or do you immediately go, bonus equals buy company stock? And I would submit that most people, when they think of it that way, they go, yeah, that's probably the last thing I would think about would be buying company stock. And so ESPP RSUs, to your point, is a conveyor belt. I like that analogy. Like, this is your pay. It's like deferred. You got to wait a little bit to get it. But this is your paycheck. Your company Was like, hey, we're giving you a bonus. Psych. You know, you can have it in a year. And now you get it and you're like, I'm just going to buy company stock with it.

[A]

Well, and I actually had that as one of my things. I mean, that was the fifth one on my list of five was RSU's truly are a piece of your income compensation.

[B]

Yeah.

[A]

And I love your analogy of, hey, if this were cash, is this what I would do with it? ESPP really is opportunity to invest more money and use that to get a free additional return. So it is a way to invest more money.

[B]

Yeah, it's like a match in your 401k. But still, you don't want to pile it up in company stocks.

[A]

I think no matter how you come out. Number two on my list was to be tax aware. We used Nvidia earlier. Let's use Apple stock.

[B]

Okay.

[A]

Apple stock, highly appreciated. And grandma owned a bunch of it passes away. And now you own all of this Apple stock. Let's talk about taxes on this sale. If I inherit this money from Grandma, will I be subject to tax on all these gains?

[B]

Most likely not. It largely depends on how you got the shares. You know, if it literally was transferred to you because grandma died and you know, is in her brokerage account and the executor called or Schwab called and said, hey, you're the beneficiary of this account. We're opening up a new account, we're sending the shares to your account. Then you get what's called a step up in basis. You get the opportunity to own the shares not at grandma's purchase price because if she sold it, she would pay capital gains tax, but at the value it was on the date of her death. And this is what I was talking about before where I said, if you inherit stock, there's really no excuse to not be diversified because there's very little tax bill associated with that, generally speaking. Unless, of course, you know, grandma died on Tuesday and Wednesday, you know, the Stock ran up 30% or something. But even then you're only paying gains on the difference between the one day when she passed away, the one day, you know, so in all likelihood, there's a pretty low amount there. But this counts for all capital assets. So this is the lake house, this is the homestead, this is the farm. These are all the things that if you get them through inheritance, generally speaking, you get what's called a step up in basis and you get the opportunity to own it at today's price. And then, you know, you sell it and you don't have to pay any, any cap gains taxes on it. This is why. Also, by the way, it's a really stupid idea to give away stuff. Or you see this, people say like, oh, we have to transfer all grandma's money before she dies to make it easy. Oh, it's like, this is the dumbest thing possible because now you just. Because it was a gift while she was alive. Now you get, you inherit her basis, you inherit the property value that she bought it at. You see this all the time at lake houses or the farm. These are the two offenders. And I don't know why it's just these two, but it is. It's like, well, we, you know, grandpa built the Lake House in 1971 and now he's going to pass away in 2024. Oh crap. We got to make this easy. We don't have to want to do paperwork. God forbid we have to go down to the courthouse and do paperwork. So we'll just have grandpa sign this thing that says he gives us the property today.

[C]

Ah.

[B]

And the end. Everybody jokes about it. They go, I bought it for a dollar. Look at me, I'm cute. Look at this cute thing. I give grandpa a dollar. Hardy har har. I was going to hear that. Anyway, you get the property, you do your thing, and then five years later you're going, nah, we're not up there all the time anymore. We're going to sell it. You know what CPA says, hey, how'd you get it? And you go, well, I got it.

[A]

I bought it for a dollar.

[B]

And he goes, oh, did you inherit from grandpa? Well, I mean, yeah, but I mean, not technically, no. Technically I bought it for a dollar. Well, guess what? Technically you owe all the capital gains

[A]

tax except a dollar. You saved the capital gains tax on

[B]

the dollar because guess what? Your smart ass, like, literally wrote it down on a piece of paper and filed it with the courthouse or filed it with the county purchase for $1. Like, it's like you just wait, inherit it. It's okay. It'll be all right. There's attorneys. It'll cost a few bucks, but it'll cost a hell of a lot less than paying friggin capital gains taxes on it.

[A]

This would be a lot funnier if I didn't have a family member just do this. Just do this. Even though we told them not to. Even though we told them ahead of time not to.

[B]

Yeah, this is commonplace. Yeah, you would think. Oh, oh, geez, family's got this covered. Nope, nope. They're a bunch of idiots too, you know, with the answer usually being, I saw you in your diapers. I'm not listening to you guys. It's like, you're right, you know. What would I know? I've only been doing this for 30 years.

[A]

That was exactly the way I was treated by the way. It was like, oh, no, no, no, no, no, no, no, no, you don't,

[B]

you don't understand, young man. We've. The adults are talking, we have it handled and all I can think about is thank you for making my life worse when you're dead. You know, it's like literally, who's, who's going to have to solve this problem? People are going to go, hey, what do we do? I'll go, well, you should have done it my way to begin with. And I know that's what's happening to

[A]

you too, Joe, but I think that no matter how you came about the shares, the big point here, Stackers, is to think about what is the tax consequence of when I sell. What is the tax consequence going to be? So a few strategies. You can spread the sales across years. We talked about that. Holding on to it for a couple years, maybe get long term tax treatment. If it's an employee stock purchase plan or you've bought the stock and it.

[B]

Well, you can look at your tax, you can do some tax planning at the end of the year. Let's say you got that appreciated stock you're trying to get rid of. You can do some tax planning at the end of the year and say, where am I at? What am I going to pay? Can I get some at 15%? Can I get some at zero? Is my income such that I might have a 0% tax bracket for a little bit still? This is the crazy thing, the most you pay in capital gains taxes long term anyway is 23.9. Right. Which is still pretty good. It's like pretty good, you know, tax rate, considering your income tax rate. So well, and I had somebody asked

[A]

me this before OG which is holding on to an individual stock for two years with the additional risk versus that frankly, small bump up in the big scheme of things in, in tax ramification, which one's riskier, hold on to it for two years or the higher tax rate? And I actually had a stacker who was like, I would prefer to get the short term capital gains rate and not have that risk. And I'm okay with, well, it certainly

[B]

depends on what your rate is. Short term capital Gains rate could be as much as, you know, your, your ordinary income rate, which could be as high as 37% plus state. So I mean it could be 50%, but it's still only 50% on the gain, you know, you're never paying on your own contribution.

[A]

And that's another piece that I had here with tax where moves is if you've got lower income years or you're in a lower tax bracket, just think about managing tax brackets. And also you can offset some gains with losses. If you've got that flyer that you took that didn't work out and you, you know, it's time to finally sell that thing, you can hopefully offset some gains there. The third strategy to make sure that this concentrated piece is not as big a piece and we'll see this when we talk about rebalancing. OG there's two ways to rebalance a portfolio. One is to sell and rebal balance, but the other one is to not sell. Just stop accumulating that stock and build around it. Of course you still have the concentrated stock risk, but as the rest of your portfolio grows now you're getting rid of some of the risk because it represents a smaller piece of your overall pie.

[B]

Right. Basically what you're talking about here is accepting the percentage that I have and then saying, okay, I'm not going to add any more to the mix. The downside is that if you get too far ahead, like it's almost un, you can almost not be able to catch up no matter how hard you try. This is like the same concept of like, I've got a million bucks of pre tax money. Should I do Roth and try to diversify? It's like, yeah, you should, but you're not going to catch your pre tax money. Your pre tax money is growing at a rate faster than you can put money in and it's compounding at that rate. So you're not going to be even money basically. So be careful with that. Thinking of like, I got a million dollars of Apple stock, I'll just stop saving an Apple. It's like, well, Apple's going to be 2 million before you get another million saved.

[A]

We talked to Grant Sabadier about this. Grant, of course, been on the show a couple times. Also was live with us in Detroit for a great Q and A session back when I lived there. And he said in front of the whole group OG that the his issue was his Amazon stock just continued to grow so quickly that had he decided to just hold it, which is what he was doing Initially, he's like, oh, I'll just grow around it. He's like, it still became the bigger piece of my portfolio. I could not put money fast enough into other places because my Amazon had grown so big. And this was a True Believer thing where he just believed in the early days that Amazon, this little book company online, was going to be.

[B]

Never heard of him.

[A]

Yeah, gonna be a big thing. I want to get back to something that you foreshadowed earlier, which was when you talked about not getting in this position in the first place, because this is. Was my last point. Oh, gee. Which was, you know, maybe when you're thinking about your portfolio, obviously if you get inheritance, there's nothing you can do about that. If you get massive RSU's or stock options, maybe not a ton you can do about that. Think about, ultimately, how much of my portfolio do I want in any one position? And what should that number be? OG for me, I'm. I think, you know, 10%. Okay. You might get me to argue 15 if you're super aggressive, but I think anything over 15, you're really asking for it.

[B]

Yeah, I don't. I don't know that I have a dog in the hunt. In terms of the percentage. It's. It's like that. I can tell you what's too much. You know, I'd say probably. Like you said, maybe 20 is probably too much. But I can see where it gets out of hand, and it can get out of hand quickly, and that's not necessarily a bad thing. Look again back to the results thing here. If you happen to be in a company that's fast growing and you happen to get a bunch of company stock and it happens to 10x, these are all really awesome problems you're talking. Oh, back to that Merck story that I told at the beginning. That guy had 12 million a company stock, and he didn't want to pay the tax. It was 2 million bucks in taxes to diversify the other 10. This is a really stupid decision on his part, and it's a pretty fair trade. I mean, every one of us would take a $12 million paycheck today, no matter the tax rate. You know what I mean? Like you say, well, it's a 50% tax rate. Be like, okay, yeah, whatever. I mean, I like it to be less. But if somebody said, I'm going to give you $10 million, and they said, well, hold on, before I give you the 10, you got to give us two back, nobody would be like, oh, to hell with it. Then I'm good, you keep it. All right, like this is, we just have to like evaluate it from a different side of the equation, you know what I mean? So these are all good problems to have. If your company, if you've gotten company stock and it's gone up 10x and you all of a sudden you go, you wake up one day and you go, oh my goodness, I haven't been paying attention to this. I just been making widgets. Now I got 2 million bucks, 5 million bucks, 10 million bucks in company stock. What, oh, what shall I do? Well, you know, maybe you write a big check to the gov and call it a day or you implement some of these other strategies, you know, in terms of dollar cost averaging out. But I, I, I just failed to like see this as a problem. This is a fantastic, it's a great,

[A]

great, great, great issue, which I think is where some of the fear comes in is because you've been gifted or you worked really hard to get to this position where you got a bunch of money in one stock. And most of the time it's a combination of both, right? I worked really hard to get here and it grew. So I was, I was right either with the company I worked for or my conviction, whatever it might be, and it grew. But I think this is where it's important to reframe that diversifying out of this is not about giving up upside. It's just making sure that one decision doesn't define everything from here on out. Like you're not walking away from success. OG when you decide to diversify portfolio, you're actually protecting the success that you've had. And I think it's important to reframe that way.

[B]

Absolutely. And look, there's a bunch of other 201301 strategies of like if you have this company stock problem or you have under diversification problem, you can put buy sell orders around the numbers, you know, to say, hey, you know, if it goes above this I sell. If it goes below this, I sell. To kind of protect yourself, you can use option trades to do it. You could do a product called an exchange fund where you take all of your company stock, you mix it with everybody else in the universe who also has a bunch of company stock and you guys create your own ETF basically. And so there's products that exist like that. So there's a lot of specialization around here. Sometimes the juice isn't worth the squeeze. You know, you look at it and go, does it make sense to do this for $100,000 position? Probably not. Probably just sell it. Does it make sense for a million? Depends on your overall net worth. Right, because there's gimmes and gotchas for all of these different strategies. But I think recognizing that you want to do something and sitting down, clear headed and going, okay, let me make a plan of what I'm going to do. Like what's the best outcome here and how do I protect myself? Like you said, I think is the biggest thing and I think this is probably the highlight of it. Which one of these things will piss me off the least? You know, like this is my standard. Which one sucks less? Because they're all bad outcomes in terms of what's likely to happen, which one sucks the worst or the least. I mean, and then you make the plan when you're clear headed, not when the stock's going up or down 20% a day, not when it's chaos and then you just go execute it and you live with the outcome. The thing I want to point out here by the way also is in all likelihood you're not moving the money from the market to cash, you're moving it from the market to another part of the market. Right. It's like the question when somebody rolls over their 401k to an IRA, like when should I invest it? Well, frigging right now. It was invested five seconds ago when it left Empower and now it's at Fidelity. Why would, what, what are we doing? Like get it back to where it was, you know. So yeah, you're not saying, hey, I'm going to take this money and put in cash. Right. It's still going to be diversified, it's still going to be invested and growing long term.

[A]

Well, the second you move to cash, you start playing that game of should I do it now, should do it later and then well, yeah, that's a whole different deal.

[B]

Yeah, so don't do that. But yeah, think about it clear headed. Create a plan and execute the plan. No matter where you are, whether you're at the beginning of this going, hey, I think, I think I'm going to have this problem if I don't pay attention to it or you feel like you're in the problem. Either one of these is the same

[A]

thought process coming up later in today's show. Oh gee, and Anna are going to be talking about insurance this week, but guess what, in two weeks they're going to be talking about tax efficient withdrawals and in three weeks equity compensation. And this has a lot to do. Both of those topics have a lot to do with what we covered today. So more to come on this in the OG and Anna segment, which we also are now playing on our YouTube channel as its standalone series. Yeah, so if you're interested in the basics, go sign up for the 201 our newsletter stacky benjamins.com 201 and sign up for the YouTube channel so that you can see all the OG and Anna basics and work through your financial plan. At this point in the show, though, we hand the keys to the car. This is scary. Over to Doug, who's sitting at the end of the card table. I'm sure even though I'm not there, I can imagine him there sitting at the end of the card table, ready to have what he calls the best part of the show. Today's trivia question.

[C]

Hey there, Stackers. I'm Joe's mom's neighbor, Doug, and man, if someone doesn't fix the dryer, mom is gonna blow her top. You know how it is. She wants her spelunking outfits ready to roll. Yeah, she's into cave exploration now. And of course, that's when the dryer breaks. Just an unfortunate coincidence, by the way, that I happen to have a dryer stuffed with bed comforters and some auto parts when it stopped working. Does mom have dryer insurance? Asking for a friend? I'll find out. But while I do answer this insurance question, on today's date, back in 1980, a big old mountain blew its top off, resulting in huge amounts of devastation and of course, insurance claims. There were more than 40,000 insurance claims and over $27 million paid out, which would have been over 100 million today. But what mountain was it? I'll be back right after I figure out if there's a way to blame this on OG I'm tired of him always being Joe's mom's favorite down here. Hey there Stackers. I'm laundry lover and guy about to watch a few dryer repair videos on the YouTube machine. Joe's mom's neighbor, Doug. Well, good news and bad news because the auto parts in the dryer were from an El Camino. I think blame claiming this on OG is out. And Joe's mom has no dryer insurance either. So more bad news. But on the good news side of the ledger, she did say that if I get it repaired quickly, I'll only have a week of dishwasher duty. So, you know, winning. Sadly, a mountain came tumbling down in a terrifying event on today's date in history. What mountain blew its top in 1980. It was, of course, the Mount St. Helens volcano in Washington state. While considered an act of God, the act of God clause you hear about in insurance contracts wasn't invoked by insurance companies. And now let's send you back to two people who are bringing the hot magma in personal finance. No, I thought that was a pretty good one. It's OG and Anna.

[B]

Oh, insurance, our favorite topic of all time. I know you're listening to a financial podcast on a Monday morning going, I really wish that we would talk more about life insurance and disability insurance and property and casualty insurance. That's super fun. But here's what changes my mind about this topic. It's really not about the products and we've talked about this on the show before. It's not what the agent sold you. It's about answering the question of how are we going to transfer risk to a third party or what of the risk that we exist because the risk already is there. How much of that risk do we want to own ourselves versus transferring to a third party? So Anna's going to walk us through the framework today and then we'll go kind of deep into each one of those in the time that we have. And all of this, you can follow along on your guidebook. And if you don't have the guidebook, stackingbenjamins.com basicsguide you get both of them listed in an email that gets sent to you. Anna, let's go through the kind of the four buckets, if you will, and then we'll kind of dive into each one of them.

[D]

Yeah, so we have the risk of death, which would be having life insurance in place, calculating, like what do you need on that end? We have the risk of a disability. So that would be disability insurance. What is the risk of you losing your income or part of your income and what do we need to replace that? We also have long term care. So if you needed to be in a facility for a long period of time, what is the risk there? What can we transfer over and then property and casualty. So this is your auto insurance, your homeowner's insurance, umbrella insurance, all listed under there. If, if anything were to happen with a car or with your, in your house, to yourself, to somebody else, what kind of coverage do you have in that way?

[B]

So we know the four of them and the one we didn't talk about was health insurance. And you know, if that's a missing gap right now, that's probably something that you need to tackle before you get to any of this sort of stuff. But this is the framework for today. So life insurance, everybody's got a rule of thumb. There's a lot of different calculators online. And, you know, 10 times my salary, I get paid through work or 20 times or whatever. How do we think about these calculations and specifically kind of designing it to what's going on in your life?

[D]

Yeah. So if you're going to try to calculate this yourself, which can be a little daunting, the number can come back, like, really high.

[B]

There is some big numbers that get thrown around. Yeah.

[D]

And it's scary. But once you actually apply for it, you're, you know, if you're putting an application for $4 million policy, like, don't let that scare you. It's not as expensive as you think it is. If your health is okay. The way that we think about determining this number is a looking at your total debt. Your mortgage, student loans, auto loans, anything that's considered within that liability category. That's the first calculation.

[B]

So, number one, these are the three checks that people want to write when someone they care about dies. Just in our experience, kind of straight across the board. So the first one is, I want to pay off all the bills. I don't want a mortgage. I don't want student loans still hanging over my head. I want to pay the car off. So all of your debt is kind of check number one.

[D]

Yep. Then we're looking at college funding. So if you have dependents, they're under the age of 18, they're still looking to go to college fully funding that. You do not want your spouse having to figure out student loans or passing that off to the kids. Like, just calculate that whole thing within your life insurance.

[B]

And that's the second check that people want to write.

[D]

Yes.

[B]

Almost uniformly, I want to pay the house off and I want to make sure the kids are taken care of through college. Those are the two checks straight off the way.

[D]

The last one is probably the biggest number here, which is your lifestyle expenses. It's basically allowing your spouse to, let's just say, like, not work. You don't know what the situation is going to be. If they. If they're currently working or not working, whatever that looks like, you have no idea what that's going to be. If you lose a spouse, you haven't. If you haven't experienced that. You don't know what it's like. You don't know how you're going to react, how you're going to grieve. What we like to do is we like to plan for the ability to make that decision for you. That is creating a number where they can take withdrawals from that portfolio, which is the life insurance and any other assets that you have, and be able to live off it indefinitely. What you could do there is you take your normal expenses, you can take out the liabilities of that. So your all other expenses, which we talked about calculating in the first season, take that number, multiply that by 25, which is basically like using the inverse of the 4% rule. That is your calculation of your lifestyle expenses. So then you add up the liability, you add up your college funding, and then lifestyle expenses, and that really should be your number that you're shooting for in terms of total coverage.

[B]

Total coverage, yeah. So you probably get some through work, and then you just kind of subtract it out and then you start shopping. You shop at a couple of different places, and if you find a great price, then take care of it. If you have some medical issues that maybe drive that price up a little bit, maybe you circle back to your work policy and say, hey, can I get a few more X's on my salary? Because that's usually how they price it, you know, how they think about it. But you just kind of back into the calculation there.

[D]

Yeah. Another little tip with that, when applying is just like, not every insurance company is going to determine one health issue the same. So if you have one health issue and a company is going to basically not offer you or give you a really bad rating, can always look at a different company. They might look at that health issue completely differently.

[B]

Yeah, having a broker here helps a lot too, because you can say like. Like let's say, for example, you smoke cigars. Are you a smoker or are you not a smoker?

[D]

Yep. And one company might say yes and one might say no.

[B]

Right. All right, so moving on to disability insurance, I got my disability policy through work. I'm great. Tell us how you really feel.

[D]

You gotta dig into this a little bit more. So awesome. If you have a disability policy through work, disability can be a little bit more pricey. So we definitely want to try to utilize any sort of disability through your employer. But you want to look at what that coverage is actually covering. So is it covering just your base salary, not including bonus, not including equity compensation, anything like that, which typically they don't. Typically disability policy, if they're saying, hey, you get 50 or 60%, which is normal, it's going to cover your base. So if you have half of your income coming from RSUs or stock options, or a bonus every year. Then you have a pretty big gap in terms of what disability coverage you're getting on your total take home income.

[B]

So the fix for this, kind of the same thing, you just kind of read through the policy, find out what's covering, do the calculation, figure out what the gap is and then just go buy an individual policy. Pretty simple.

[D]

Yeah. Another really quick tip on this too is make sure that you are paying taxes on the premiums if your employer is paying for your disability policy. So that if you ever need to get the benefit on it, it's going to be tax free to you.

[B]

Yeah. If you have the option for that. Sometimes, sometimes you don't have the option, but it's a nice little benefit if you can kind of toggle that switch over. And yeah, you mentioned the, you kind of casually mentioned disability insurance is expensive, but the probability of using disability insurance is much higher than other types of insurance. And if you just think about like how insurance works, it's just order of magnitude of it happening or if it happens times the probability of it happening. And so absent a health issue or something like that, and you say, well, why is my disability insurance three times more than my house insurance? My house is, I got this $800,000 house and my house insurance is 2,500 bucks a year. Why is my disability policy 5,000 a year? Well, that ought to tell you something about either the likelihood of something happening to one or either of those things or the magnitude of the cost if you, if you had to do it.

[D]

Yeah.

[B]

And then just rounding out the last two really quickly, long term care insurance, this is going to be much more for a subset of people. We start thinking about it in our practice 50 ish, 55 ish, 60 ish. And it's a catch 22. The earlier you start, the lower the premiums, but the longer you're going to pay it. Generally the later you start, the higher the premiums, but the shorter that you're going to pay it. And then you run the risk of being uninsurable because you have an issue or something like that. But again, this is about risk transfer and the likelihood of one or both of you, if you're in a relationship needing some level of assisted care later in life. And certainly if you have $25 million in the bank, you probably don't need to think about this risk because you know you've got the cash. If you've got 25,000 in the bank, you probably also don't need to think about this risk because you don't have enough money to pay the premiums. It's just a lot of.

[D]

You got Medicaid at that point, have that.

[B]

So this is something if you're in that kind of 55 to, let's say 50 till early retirement segment, I think it's part of your retirement planning. And property casualty insurance also not super, you know, fun to talk about is kind of really only people look at this stuff when the renewals come up. I know I just got my homeowner insurance renewal and that's when I paid attention to it.

[D]

Yeah. And I think the big thing with the big gap typically with property and casualty is you have a homeowner's insurance. You typically have an auto insurance. You're not. That's not an issue. It's similar to health insurance. Usually everyone has it. The issue is the umbrella policy. And most people don't have this. It's typically good to go through the same people that you're doing your auto insurance and your homeowner's insurance. They might give you a discount on that and at least covering your total net worth right now. Plus a little bit more is the ideal for an umbrella policy. Again, they're not very expensive, so just add it onto the. The bundle.

[B]

Yeah. And to save money very quickly, a couple of areas to save some cash deductibles. So if you're still running $250 collision deductibles on your, on your car, but you've got $100,000 emergency fund, you can probably bump that collision deductible up to 10002500 or something and save a profound amount of savings there on collision or comprehensive deductible. Same thing on your house, by the way. Again, if you're running a pretty good emergency fund, that's what this is for. You can lower your.

[A]

Or.

[B]

I'm sorry, increase your deductible on your home. And then any policies that you have outstanding that maybe just kind of lingering. The policies that mom and dad got you for the Gerber Baby life whole life policy that there's a whole generation of us that had those.

[D]

I did get them in the mail when I had my daughter.

[B]

Oh, okay. They still market good. So those. You've got the policy that your buddy sold you when you graduated college because he started a new career as, you know, financial planner, which was code for sell insurance to your buddies. So, you know, those things are laying around. Just an audit will help kind of consolidate all those things and give you some cash flow back to maybe redeploy either to other savings goals or to more efficient use of it. So the goal isn't to have more insurance. Right. The goal is to have the right insurance and sitting down and covering and thinking about, here are the risks that I have, here's how I'm going to cover them. Is a more strategic way of thinking through life insurance or more strategic way to think through all of your insurance?

[D]

Love it.

[B]

Season two guidebook is here. We're on episode two. We've got three, four, five, six, seven, and eight coming next week. I think we're going to do estate planning a little dovetail into insurance. So we could talk a little bit about all those tax savings you get by having all those trusts. Been seeing a lot of Instagram reels recently about rich people have trust to save taxes. Let's unpack that a little bit next time if you don't have the guidebook. Stackingbenchbens.com Basicsguide we'll get you an email and you can get both of the guidebooks there. All right, Joe, back to you in the studio.

[C]

Hi, I'm David Hirsch, and when I'm not hosting the dad to dad podcast

[B]

for the special Fathers Network, which is a dad to dad mentoring program for fathers raising kids with special needs, I'm stacking Benjamins.

[A]

Nice job, OG and thanks to Anna for stopping by. Let's mosey out on the back porch, Doug, because some of our stackers have been doing some really cool stuff.

[C]

Yeah. You know, Gertrude frequently asks members of our basement what's been going on in their lives. What successes are they proud of, Anything that happened that they're they're happy about. And we got a couple of great responses. A couple I wanted to point out or highlight was that Stacker Joan passed the final CFP exam. That's pretty exciting.

[B]

Beyond exciting. It's pretty awesome.

[A]

Yeah. That is not an easy exam, OG Hard work.

[B]

Yeah.

[C]

I mean, this next one is very impressive, but I'm kind of scratching my head on how they pulled it off. Stacker Molly claims alleges that they paid for an expensive car repair, very expensive car repair, with HSA money. And.

[A]

Wait, what?

[C]

They didn't explain how that happened, but they put that out there. So now I got to know more because this is intriguing.

[A]

That is. That is a very.

[C]

There was a window in the car that wouldn't go up and it was very expensive. And somehow they figured out how to use HSA to money to get that fixed.

[A]

So I hurt my arm trying to put the Window up.

[C]

Exactly. Right?

[A]

I don't know.

[C]

Maybe it was something like that. So Molly, please give us updates on that and let us know how you figured.

[B]

Is it maybe that there were some like pre piled up expenses and basically it was like I could reimburse myself for my hsa and so I did that and used that money to fix the car. Maybe that's.

[C]

I don't know, man. We did not get those key details from Stacker Molly, but I thought that was worth sharing with. With the group. Maybe our hive mind can share how that's done.

[A]

If there's a way you can do that legally, our Stackers will know. They. They will know. Here's how you do that.

[C]

I was going to say I hope we didn't out Molly, but she outed herself putting that out there in the basement. If. If this might be in the gray

[B]

area, Doug, you know, there is some chance, there are some ways that you can use an hsa. I'm not calling Molly a criminal, nor you a liar, but can you double check? Like, did she leave any other clues in her post that maybe we can get everybody out of jail?

[C]

All right, you know, I'm just going to read you the post and we'll see. I don't know.

[B]

Yeah, just read.

[C]

Maybe you can suss this out better than I can.

[B]

She said suss the vibe.

[C]

She says we were able to pay for an extremely expensive out of nowhere car repair with money in our emergency HYSA fund. Thankfully, this wasn't exactly an emergency, but having a car window stuck in the open position is a problem. We did the fix knowing we can pay in cash.

[B]

We don't have to read the rest of it. I think we've narrowed down how she used the hysa, which is OG short

[A]

for Health and YOLO Savings Account.

[B]

Yes, indeed.

[C]

I mean, everybody knows that. But thanks for spelling it out, Joe, and making it obvious.

[B]

Yes. So it sounds like Molly used her emergency fund and not her medical fund. Maybe she used her High Yield savings account.

[A]

High yield, huh?

[B]

Is that maybe the thing that was used and not the Health Savings Account?

[C]

I mean, I guess that's one way to read it.

[B]

Yeah, it's the way to read it actually.

[A]

Thank goodness there's two different ways to read hysa.

[B]

Okay, Molly, great news. You're not going to jail. Better news, Doug learned today that a Y changes the meaning of hsa.

[A]

I've got just one more quick thing. I recently had the opportunity to be the emcee of the Plutus Awards and we actually Won. It's kind of awkward when you are the MC and the winner is me

[B]

again.

[A]

Luckily, I was the mc. I was not the presenter. So I would introduce the presenters.

[C]

Shouts from the audience Fixed. It's fixed.

[B]

The presenter, like, literally, you're like. And now presenting for the best podcast in all time, Neighbor Doug. Neighbor Doug's like, okay. And the winner is Us. Hey, great job.

[A]

The great news is I was counting of the Plutus winners, the number that have been on our show. 65% of these people have been on the Stack of Benjamin show that won Plutuses.

[B]

So, okay, not saying that we are the cause of their Plutus award winning,

[A]

but we can neither confirm nor deny that we were the cause. However, I do think there's a high degree of correlation, which may be causation. Maybe in this case, probably causation. But congratulations to a lot of Congratulations to you, Joe.

[B]

Good job, buddy.

[A]

And to me.

[B]

And to you. Mostly to you for winning again.

[A]

All right, time to say goodbye, though. Thanks to you for hanging out with us. If you know somebody who has concentrated stock positions, this is the episode for them. So please share it with them. And also make sure that you share with them what really the big takeaways are. Because we end every episode with Doug telling us, what are the three big things that should be on our to do list now.

[C]

Well, Joe, first, take some advice from our headline. Create a plan to diversify away from big positions in one, stock. Just because you work at a place or inherit concentrated stock doesn't mean you need to go on the emotional rollercoaster of betting your future on that company. Second, insurance planning. If you start with a broader focus on risk management, you'll be on the right track. But the big lesson, don't ask Joe's mom about Mount St. Helens trivia, or you'll feel the ground rumble when she starts to rant about how she's a saint for having to deal with people in her basement podcasting all day. This show is the property of SP Podcast, LLC, Copyright 2026, and is created by Josal Sehai. You'll find out about our awesome [e-mail] along with the show notes and how you can find us on YouTube and all the usual social media spots. Come say hello. And oh, yeah, before I go, not only should you not take advice from these nerds, don't take advice from people you don't know. This show is for entertainment purposes only. Before making any financial decisions, speak with a real financial advisor. I'm Joe's mom's neighbor, Doug. And we'll see you next time back here at the stacking Benjamin show.

[A]

And the people who are all trying to stack Benjamin's. Thank you very much for all you do.

[C]

Thanks, everybody. You know, I always raise my mug for that. Like it's going on video and I'm going to be out on the Internet actually raising my mug.

[A]

And we never get to do a short of that.

[C]

We never do it. And I always hold it up so everybody can see it. Oh, look what's written on it.