The right decision could save you millions. Learn how to protect and grow your wealth with strategic planning.
The Million Dollar Mistake is a common pitfall for people with concentrated stock positions, one of the most common being Incentive Stock Options (ISOs).
At KB Financial Advisors, we’ve seen it firsthand: a $5 million opportunity can quickly shrink to under $500,000 if the right decisions aren’t made. Let’s break it down with two real-world examples.
Both clients exercise 50,000 shares at $1/share with a stock price of $35/share. Total value: $1.75 million.
When you compare Client 1 and Client 2, the numbers speak for themselves. By focusing on price rather than taxes, Client 2 preserved their wealth and avoided the Million Dollar Mistake.
It’s tempting to hold stock to avoid paying taxes, but this often leads to bigger losses. Client 1 tried to avoid a $1.8 million tax bill-and ended up losing over $4 million in stock value. Client 2 understood that taxes are a cost of securing wealth and made a strategic decision to sell and diversify.
Selling at the right time ensures you protect your wealth, even if it means paying taxes now. Diversification adds a layer of safety, guarding against single-stock declines.
At KB Financial Advisors, we specialize in helping clients with stock options make smarter decisions.
Book your introductory call to see how we can help.
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