Inherited Apple shares raise diversification concerns
A reader inherited $600,000 in Apple shares from their mother, making up half of their $1.2 million portfolio. They wonder if holding onto this concentrated position without diversifying is unwise. Financial experts advise caution to mitigate risks.
In a recent column on MarketWatch, a reader shared their dilemma following the death of their mother. The inheritance consisted of $600,000 worth of Apple shares, which now represent 50% of the individual's total portfolio valued at approximately $1.2 million. The reader asked, "Am I crazy if I don’t diversify?"
The story highlights a common challenge in personal finance: balancing emotional ties to an inheritance with sound investment principles. Apple stock has delivered strong returns over the years, but experts emphasize that such concentration increases vulnerability to company-specific risks, like regulatory changes or market downturns.
Financial planner Carolyn McClanahan, quoted in the article, responded directly: "You're not crazy, but you are taking on unnecessary risk." She recommended gradually selling portions of the Apple holdings to build a more balanced portfolio, perhaps allocating to index funds or other sectors. McClanahan noted that while Apple's performance has been impressive, diversification helps protect against volatility, especially as the reader approaches retirement age—though specific ages were not detailed.
The column, part of The Moneyist series by Quentin Fottrell, provides context on inheritance and investing. It underscores that emotional attachments can cloud judgment, but professional advice often prioritizes long-term stability over short-term gains. No timeline for the inheritance was specified, but the advice remains timeless: over-reliance on a single stock, even a successful one like Apple, can jeopardize financial security.
This case illustrates broader implications for inheritors. With U.S. inheritances totaling trillions in recent years, many face similar decisions. Experts like McClanahan stress consulting a fiduciary advisor to tailor strategies, avoiding impulsive moves that could trigger taxes or losses.