Holding Too Much of One Stock? Why Faith-Based Direct Indexing May Be a Better Path Forward

If you’ve built your wealth through a corporate role, equity compensation, or an inheritance, you may hold a large percentage of your net worth in a single stock. While that position may have served you well, it may also introduce risk and limit your ability to align your portfolio with your values.

At Stonecrop, we believe that faith-based direct indexing offers a way to gradually and tax-efficiently diversify these positions without compromising your convictions.

The Problem with Concentration

Holding a single stock in large amounts may feel logical when that company has been good to you. But over time, too much concentration may leave you exposed to risks like:

• Company-specific events such as lawsuits, leadership changes, or regulatory pressures

• Market sector shifts that impact performance

• Limited customization and flexibility in aligning with your values

If 40% or more of your portfolio is tied to one stock, your performance, tax liability, and flexibility may be influenced by a single company’s outcome.

What Is Faith-Based Direct Indexing?

Direct indexing is a portfolio strategy that allows investors to own individual components of a major index, such as the S&P 500, rather than buying the index through a fund.

This approach may offer benefits like:

• Tax efficiency through loss harvesting

• Customization by excluding companies that do not align with your values

• Gradual diversification out of a concentrated position

At Stonecrop, we apply biblical filters to the index itself, so your entire portfolio may reflect your convictions.

A Path to Purposeful Diversification

Direct indexing is not just a tax tool. We believe it may be a way to express conviction and stewardship, especially when transitioning out of a concentrated stock holding.

Your portfolio may:

• Maintain exposure to broader markets

• Reduce dependence on one company or sector

• Better reflect your faith and goals

When used as part of a charitable strategy, you may also be able to donate appreciated shares in a tax-efficient way.

Faithful Stewardship Starts Here

At Stonecrop Wealth Advisors, we help clients move from concentrated positions into more balanced, faith-aligned portfolios. Whether you are just beginning to consider diversification or ready to take action, we would be honored to guide you.

Email us at info@stonecropadvisors.com to start the conversation.