Is your portfolio too concentrated? How to measure single-position risk

Last updated June 2026

Concentration is how most people get rich — and how a lot of them get hurt. One position runs for a few years, you never trim it, and one morning it's 40% of your net worth. The gains feel great right up until a single earnings call, lawsuit, or layoff erases years of progress in a week. The fix isn't to sell everything; it's to know your number and decide on purpose.

The one number that matters

Concentration is simply the share of your investable net worth riding on a single position:

concentration = position value ÷ total investable assets

“Investable assets” means your liquid portfolio — brokerage, retirement accounts, vested equity — not your house or your car. If $180,000 of a $600,000 portfolio is one stock, you're at 30%. Add unvested RSUs in the same employer and the real exposure is often far higher than the brokerage screen shows.

The thresholds worth knowing

• Under 10%: a normal position — a bad week stings but doesn't change your life.
• 10–20%: meaningful — worth a deliberate decision rather than drift.
• 20–40%: high — a single-name shock now moves your whole plan.
• Over 40%: your financial future is largely one company's story. Even great companies fall 50%+.

There's no universal “correct” number — a founder may hold concentrated stock on purpose. The danger is holding it by accident, having never chosen the exposure.

The hidden multiplier: correlated concentration

Single-stock isn't the only kind. If your salary, your RSUs, your ESPP, and your largest brokerage holding are all the same employer, a rough quarter can hit your income and your net worth at once — exactly when you can least afford it. Three 12% positions in the same sector can behave like one 36% bet. Real concentration is about shared fate, not just a single ticker.

How to trim without a surprise tax bill

Selling a big winner triggers capital gains, which is why people freeze and do nothing. A calmer playbook:

• Trim gradually — a fixed slice each quarter beats trying to time the top.
• Use the tax-aware order — sell lots with the smallest gains first, and see the tax-optimal selling sequence before you act.
• Direct new money elsewhere — point fresh contributions and dividends at everything but the concentrated name.
• Mind registered accounts — rebalancing inside an IRA/401(k) or RRSP/TFSA has no immediate tax cost.

How Orbeva watches it for you

Orbeva computes your concentration continuously from your real, connected holdings — across brokerage and retirement accounts — and flags when one position grows into too much of your net worth, before a shock makes the decision for you. It also tracks how close any margin loan is to a forced sale and surfaces your single highest-impact next move. It's read-only — it never trades for you; it just makes sure “too much in one thing” is never a surprise.

See your concentration risk — start free →

General information and decision support, not financial or investment advice. Concentration tolerance is personal; consider your full situation and a professional before making large changes.