May 11, 2022
The Bay Area is a hub for many industries, including tech, and investors here often find themselves with a concentrated portfolio due to restricted stock grants and incentive stock options. If this describes you, take note: Diversifying your investments can be a smart move.
Silicon Valley tech employees have been jolted by their stock options performance lately. At Intero Los Altos’ Monday office meeting, our title company rep brought up a point reminding us that in 2009, people who sold their stocks to buy residential real estate have done very, very well!
The Bay Area has historically been home to many companies that offer stock incentives to high-level executives. If you’re a leader in one of those companies, you may hold far too high of a percentage of wealth in your employer or previous employer’s stock. Here’s a recent article which considers the recent plunge in technology shares providing investors with a harsh lesson in that can hamper employee retention and threaten cash flow when share prices collapse.
“As stock prices fall, companies may have to offer employees even more shares to achieve the same compensation levels.” Here are companies that heavily rely on employee stock rewards.
Having a large percentage of your holdings in a single company can help you build wealth quickly when that company is on the rise. However, that same volatility can wipe you out if something goes wrong.
It may seem counterintuitive to cash out stock options now. Nobody wishes to cash in when their stocks are plummeting, but remember that nobody wants to let go of their stock when it is skyrocketing either. Real estate is a safer haven during times of inflation. It appreciates over time and it’s tangible. There are many ways to profit from real estate, from cash flow of rental properties to
appreciation of assets.
Consider balancing your asset class portfolio and cash out. Why not buy a multigenerational house? Think of an extra guest space for relatives visiting, building an ADU, or buying a property under $800K (I can suggest several areas). Real Estate can create passive income with lower volatility and that might be the right move for you.
Let me know if you would like a no pressure introduction to our financial wealth advisors providing Intero concierge service and advice before making any financial decisions.
Also please keep in mind that I’m always available to help your family/friends with any real estate or financial questions.
Lynne Watanabe MacFarlane, Realtor
Intero | Berkshire Hathaway affiliate
408-800-1141 or 831-346-2743