How Much Is Enough: Achieving Your Life Goals Without Ever Needing to Work Again
If you work at NVIDIA and hold company stock, there's a crucial question you need to answer for yourself: How much is enough? Answering this question can change the trajectory of your career and your financial future but it’s not an easy question to address.
A Real-Life Lesson in Concentrated Stock Risk
Back in 2021, we started working with an individual who was wrestling with this very question. They held roughly $8 million in a single tech company’s stock, which made up the majority of their $10 million net worth. During our conversations, they spoke about wanting to spend more time with family, pursue meaningful volunteer work, focus on personal interests, gain peace of mind, and ultimately achieve financial independence. Our financial projections showed that they could achieve all these goals almost immediately, assuming they were willing to divest from their concentrated stock position.
However, like many others, they were reluctant to act. That tech stock had been the foundation of their wealth, and shifting away from it felt like abandoning a proven path. But the truth is, even though tech stocks have delivered strong returns in the past, a thoughtful investment strategy should reflect your unique goals and comfort with risk.
Unfortunately, over the following years, the stock’s value fell more than 90%. This sharp decline pushed their timeline for financial independence back by more than ten years.
How to Define “Enough” for Yourself
Understanding how much is enough is a deeply personal endeavor, but it's essential for achieving your life goals. Here are some steps to help you determine what ‘enough’ means for you:
1. Identify Your Goals: Reflect on what you want out of life. Whether it's financial freedom, more time for family, pursuing passion projects, or changing careers, clearly define your goals.
2. Evaluate Your Financial Position: Take a comprehensive look at your current financial standing, including all assets, liabilities, and investments. Determine how much you need invested to meet the goals you identified.
3. Assess Your Risk Tolerance: Understand your ability and willingness to take risks. This is crucial for building a portfolio that you can stick with through market fluctuations and can guide your investment decisions.
4. Build a Diversified Portfolio: Diversification helps reduce risk and provides a more stable foundation for achieving your financial goals. Consider reallocating a portion of your concentrated stock positions into a mix of assets that align with your objectives.
Stay Aligned with Your North Star
As you build wealth, it's essential to regularly remind yourself of your "North Star"—the guiding principle that keeps you focused on your goals. Your financial plan should always align with this objective.
For instance, if your goal is to achieve financial freedom and spend more time with your family, then holding onto a highly volatile stock position may not be the best strategy. Diversifying your investments can provide the stability and peace of mind needed to focus on what truly matters.
On the other hand, if your goal is to maintain a lengthy career and take higher risks for potentially bigger rewards, you may wish to keep a larger amount of your assets in your company equity while diversifying in other investment vehicles for your long term retirement goals.
Get Help Defining “Enough”
If you find yourself in a similar situation or aspire to reach financial independence, consider seeking professional advice. At Citrine Capital, we specialize in helping clients navigate these exact circumstances. Our team can provide personalized strategies to help you achieve your life goals without unnecessary risk.
Remember, knowing how much is enough can transform your life. It can allow you to make decisions that align with your values and objectives, ensuring that you never have to work again unless you choose to.
Conclusion: Take Control of Your Future
Determining how much is enough is not just about numbers—it's about aligning your financial strategy with your life goals. If you have substantial holdings in company stock, like many at NVIDIA, it might be time to reassess and diversify some of those holdings to ensure your portfolio supports your aspirations.
Don't let market volatility dictate your future. Take control, define your ‘enough’, and make the moves necessary to secure your dreams.
Reach out to Citrine Capital today and let us help you create a plan that ensures you achieve your life goals and never have to work again—unless you want to.
About The Author
Kiersten Peshek, CFP® is a Lead Wealth Advisor at Citrine Capital, a San Francisco-based wealth management and tax planning firm serving tech professionals, founders, and business owners. They specialize in equity compensation, LGBTQ+ financial planning, and FIRE (Financial Independence, Retire Early) strategies.
As a career changer, Kiersten brings a unique blend of analytical insight and empathy to client relationships. Since joining the financial planning profession in 2020, they’ve been passionate about helping clients align their finances with their values to create more fulfilling, purpose-driven lives.