A few years ago, I was having coffee with my friend Marcus, a senior software engineer at a well-known Canadian tech company. His RSUs had been vesting quarterly, his company’s stock price had tripled since he joined, and his net worth had crossed the $600,000 mark. “Why would I diversify?” he asked me. “This stock only goes up.”

Eighteen months later, the stock had dropped 70%. Marcus’s net worth was cut in half. Not because he lost his job or made a bad bet on a meme stock – but because he had his salary, his career growth, and his entire investment portfolio tied to the same company. When it stumbled, everything stumbled with it.

Marcus is one of the smartest people I know. He just fell into a trap that catches thousands of Canadian tech workers every year: concentration risk driven by equity compensation. If you work at Shopify, Amazon, Google, Microsoft, or any company that pays you partly in stock, this post is for you. Let’s talk about how to turn that equity compensation into lasting, diversified wealth – and why XEQT is the perfect tool to do it.

XEQT and Stock Options/RSUs: A Canadian Tech Worker’s Guide to Concentration Risk

1. A Quick Refresher: RSUs and Stock Options

If you are reading this, you probably already know the basics. But let’s make sure we are on the same page, because the details matter when we get to tax implications later.

Restricted Stock Units (RSUs) are a promise from your employer to give you shares on a set schedule. You don’t pay anything to receive them. When they vest (typically over 3-4 years, often quarterly), you receive actual shares. At vesting, the fair market value counts as employment income on your tax return – just like your salary.

Stock options give you the right to buy company shares at a locked-in price (the “strike price”). If the stock price rises above your strike price, you can exercise the options, buy shares at the lower price, and either hold or sell. Options typically also vest over 3-4 years.

The key difference: RSUs always have value as long as the stock is worth anything. Options can be “underwater” – worthless – if the stock price drops below your strike price.

Both are powerful wealth-building tools. And both create a dangerous problem if you don’t manage them carefully.

2. The Concentration Risk Problem: Your Eggs, One Basket

Here’s the uncomfortable reality most tech workers don’t think about until it’s too late: your employer already controls your salary, your benefits, your career trajectory, and your daily stability. If a large chunk of your investment portfolio is also in that same company’s stock, you are catastrophically exposed to a single point of failure.

Imagine a financial advisor pitched you this idea: “I want you to take 40-60% of your total net worth and invest it in a single stock. Oh, and you also depend on that same company for your paycheque and your health benefits.”

You would laugh them out of the room. But that is exactly what happens when you simply hold your RSUs after vesting and never sell.

The problem compounds over time. If you join a company early and the stock performs well, the equity portion of your net worth can balloon to 50%, 60%, even 80% of everything you own. It feels amazing on the way up. It feels catastrophic on the way down.

This is the core argument for diversification over single stock risk. And if you’re a tech worker, it applies to you more than almost anyone else.

3. When Concentration Goes Wrong: Real-World Canadian Examples

This is not theoretical. It has happened repeatedly, and it has destroyed real wealth for real Canadian workers.

Nortel Networks (2000-2002). At its peak, Nortel made up over 35% of the entire TSX index. Employees in Ottawa held massive amounts of company stock. Many had been told – by managers, by colleagues, by the culture – that selling was disloyal. The stock went from $124 to under $1. Thousands of employees lost their retirement savings, their stock options became worthless, and many lost their jobs at the same time.

Shopify (2021-2022). Shopify peaked around $222 per share (split-adjusted) in November 2021. By the end of 2022, it was trading around $40 – a drop of roughly 80%. Employees who had been accumulating RSUs during the boom years watched paper wealth evaporate. Many experienced layoffs at the same time the stock was cratering.

BlackBerry (2008-2013). At its peak, BlackBerry (then Research In Motion) traded above $140. Waterloo-based employees held significant equity positions. The stock eventually fell below $10. Many held on the entire way down, waiting for a recovery that never came.

The pattern is always the same: a beloved company hits a rough patch, and employees who tied their financial future to that single stock lose both income and savings simultaneously.

4. The “Golden Handcuffs” Psychology: Why We Hold Too Long

Knowing you should diversify and actually doing it are two completely different things. Tech workers face a unique set of psychological barriers that make selling company stock feel almost impossible.

Loyalty bias. You built this product. You know how good the team is. Selling feels disloyal, even though it is just basic financial hygiene.

Anchoring to the high. If your company stock hit $200 and is now at $120, your brain screams “it’s on sale!” You anchor to the peak price and convince yourself it will return there. But past prices are irrelevant to future returns. This is the sunk cost fallacy in action.

The “I’ll sell when it hits $X” trap. You pick an arbitrary price target. When the stock hits it, you move the target higher. When it drops, you wait for it to come back. You never actually sell.

Social pressure. In many tech companies, talking about selling your stock is taboo. Colleagues brag about their unrealized gains. Selling feels like admitting you don’t believe in the company.

Tax procrastination. “I don’t want to deal with the taxes” is the most common excuse. But as we’ll cover in Sections 7 and 8, the tax situation is usually much simpler than people think.

If any of this resonates, you’re not alone. But recognizing these biases is the first step to overcoming them. If you’re struggling with the emotional side, I wrote a whole piece on whether you should sell your stocks for XEQT that walks through the decision framework in detail.

5. The Framework: Sell RSUs as They Vest, Deploy Into XEQT

Here is the simplest, most effective strategy for Canadian tech workers with RSU compensation:

Sell your RSUs the day they vest. Take the after-tax proceeds and buy XEQT.

That’s it. That’s the framework.

Here’s why this works:

1. You already “got paid” at vesting. CRA treats it as employment income at the full market value. Holding after vesting is a brand-new investment decision – you’re choosing to invest in a single stock instead of deploying elsewhere.

2. Selling at vest is tax-neutral. There is usually zero capital gain or loss because the price hasn’t moved. Clean and simple.

3. XEQT gives you instant diversification. One purchase, 9,000+ stocks across 49 countries. Your company is probably already in there (Section 12) – now it’s just an appropriately sized slice.

4. It removes emotion from the equation. You sell at vest, buy XEQT, and move on. The decision is automatic.

The Vest-Sell-Invest Pipeline

Here is what the process looks like in practice:

• RSU vests (e.g., 50 shares at $100 each = $5,000 market value)
• Employer withholds taxes (typically about 30-40% for combined federal and provincial income tax)
• You receive net shares or cash (let’s say $3,000 after tax withholding)
• You sell any remaining shares immediately
• You transfer the cash to your Wealthsimple TFSA (or RRSP, or non-registered – see Section 10)
• You buy XEQT with the proceeds

Repeat every quarter. Over a few years, you will build a beautifully diversified XEQT portfolio funded entirely by your equity compensation, while keeping your concentration risk near zero.

6. Stock Options: Exercise-and-Sell vs. Hold Strategies

Stock options are a bit more complex than RSUs because you have to pay the exercise price to acquire the shares. You have two basic strategies.

Exercise-and-sell (same day). You exercise your options and immediately sell the shares. You pocket the difference between the market price and your strike price (minus taxes). Take the after-tax proceeds and buy XEQT.

Exercise-and-hold. You exercise your options, pay the strike price out of pocket, and hold the shares. This can make sense if you want to start the clock on capital gains treatment or you strongly believe in the stock’s upside. But it requires cash upfront and increases your concentration risk.

For most Canadian tech workers, exercise-and-sell is the better default. It eliminates concentration risk and keeps your portfolio diversified.

One exception worth noting

If your stock options qualify for the 50% stock option deduction (more on this in Section 8), there can be a tax advantage to exercising and holding. But talk to a tax professional first – the rules are specific and the downside of getting it wrong is real.

7. Tax Implications of RSUs in Canada

Let’s clear up the tax picture for RSUs, because confusion about taxes is one of the main reasons people delay selling.

At vesting:

• The fair market value of your vested RSUs is added to your employment income for the year
• Your employer should withhold taxes (similar to how they withhold from your salary)
• This amount appears on your T4 slip
• You pay tax at your marginal income tax rate – no special treatment

After vesting (if you hold):

• Your cost base (adjusted cost base, or ACB) is the market value at the time of vesting
• Any increase in price from vesting to selling is a capital gain (50% inclusion rate)
• Any decrease in price from vesting to selling is a capital loss (can offset other capital gains)

If you sell immediately at vest:

• There is usually zero or near-zero capital gain/loss
• The taxes were already handled through payroll withholding at vesting
• Nothing complicated to report beyond what is already on your T4

This is why the sell-at-vest strategy is so clean from a tax perspective. You already paid the tax at vesting. Selling immediately doesn’t create additional tax. Holding after vesting and selling later just adds complexity, ACB tracking, and capital gains/losses to deal with. For a deeper dive on capital gains, see our capital gains tax guide.

8. Tax Implications of Stock Options in Canada

Stock options have a more favorable – but more complicated – tax treatment than RSUs.

The basics:

• When you exercise stock options, the difference between the market price and your strike price (the “employment benefit”) is taxed as employment income
• This benefit appears on your T4

The 50% stock option deduction:

• If conditions are met, you can deduct 50% of the stock option benefit from taxable income – effectively halving the tax rate
• Conditions include: shares must be of a CCPC, or the exercise price must equal or exceed fair market value at grant, and shares must be ordinary common shares

Important change:

• The federal government introduced a $200,000 annual cap on the stock option deduction for employees of large, publicly listed companies (options granted after June 2021)
• Excess above $200,000 is taxed as regular employment income (no 50% deduction)

The timing trap:

• If you exercise and hold, you owe tax on the employment benefit in the year of exercise – even if you haven’t sold and have no cash to pay the tax
• Many people exercise, hold, watch the stock drop, and get stuck with a tax bill on gains that have evaporated
• Exercise-and-sell on the same day avoids this entirely

9. How Much Company Stock Is Too Much? The 5-10% Rule

So what is the right amount of company stock to hold? Financial planners and portfolio managers generally agree on a guideline: no more than 5-10% of your total investment portfolio should be in any single stock, including your employer’s.

Some would argue even 10% is too high when it is your employer, because you already have so much non-financial exposure to the company (your job, your career network, your skills that may be company-specific).

Here is a simple way to think about it:

• 0-5% in company stock: Ideal. Maximum diversification. Your company is in XEQT anyway.
• 5-10% in company stock: Acceptable if done consciously with a plan to reduce over time.
• 10-25% in company stock: Elevated risk. Actively work to diversify.
• 25%+ in company stock: Dangerous territory. This is where Nortel and Shopify employees were at the peak. Get a plan in place immediately.

To calculate yours: (Value of company stock) / (Total portfolio value) x 100. Include all accounts – TFSA, RRSP, non-registered, employer share purchase plans. Use the calculator to model different XEQT allocations.

10. Account Optimization: Where to Put Your XEQT Purchases

When you sell company stock and buy XEQT, which account should you buy it in? This matters more than most people realize. The priority order for most Canadian tech workers:

1. TFSA (Tax-Free Savings Account) – Fill this first.

• All XEQT growth and dividends are completely tax-free, forever
• No tax on withdrawal
• Contribution room for 2026 is $7,000 (plus any unused room from previous years)

2. RRSP (Registered Retirement Savings Plan) – Fill this second.

• Contributions are tax-deductible – especially valuable at high tech-worker tax brackets
• If your employer offers RRSP matching, always get the full match first – that’s free money
• Growth is tax-deferred until withdrawal

3. FHSA (First Home Savings Account) – If saving for a first home.

• Contributions are tax-deductible AND withdrawals for a home purchase are tax-free
• $8,000 per year, $40,000 lifetime limit

4. Non-registered account – After registered accounts are full.

• You’ll pay tax on dividends and capital gains, but this is still far better than holding concentrated company stock
• Understanding the tax basics of non-registered XEQT helps you plan for tax efficiency

For a detailed comparison, check out our TFSA vs RRSP guide.

11. Building Your Diversification Plan: The Quarterly Pipeline

Let’s put it all together into a concrete, repeatable plan that aligns with most RSU vesting schedules.

Every quarter when RSUs vest:

1. Log in to your brokerage or employee stock plan portal
2. Sell all newly vested shares (or exercise-and-sell if you have options)
3. Note the after-tax proceeds (your employer should handle the tax withholding)
4. Transfer the cash to your personal investing account (Wealthsimple or wherever you hold XEQT)
5. Contribute to accounts in priority order: TFSA first, then RRSP (up to contribution room), then non-registered
6. Buy XEQT in the appropriate account
7. Track the transaction for your records (date, amount, account)

If you already have a large concentrated position:

If you’ve been accumulating company stock for years, don’t panic-sell everything at once. Consider a phased approach:

• Month 1-3: Sell 25% of your holdings, buy XEQT
• Month 4-6: Sell another 25%, buy XEQT
• Month 7-9: Sell another 25%, buy XEQT
• Month 10-12: Sell the final 25% (or keep up to 5-10% if you want ongoing exposure)

This reduces the emotional difficulty of selling all at once and spreads capital gains across tax years. For all new vests going forward, switch to the immediate sell-at-vest pipeline above.

12. The XEQT Advantage: Your Company Is Already In There

Here is something that surprises many tech workers: if you work for a large-cap company, your employer’s stock is almost certainly already inside XEQT.

XEQT holds over 9,000 stocks through its underlying funds. Check the XEQT holdings breakdown – Amazon, Google (Alphabet), Microsoft, Apple, Shopify, and virtually every other major tech company are represented.

By selling your company stock and buying XEQT, you are not “giving up” on your company. You still own it – just as part of a diversified allocation instead of a concentrated bet.

Let’s say you hold $50,000 in Shopify stock directly. If you sell it and buy $50,000 of XEQT, you now own:

• A small, market-weight position in Shopify
• Positions in Apple, Microsoft, Amazon, Nvidia, and thousands of other companies
• Exposure to Canadian banks, energy, and real estate
• International stocks across Europe, Asia, and emerging markets

Same company exposure. Dramatically less risk. That is the entire point of diversification.

13. The Emotional Difficulty of Selling “Winning” Stock

I want to acknowledge something that spreadsheets and tax math can’t capture: selling company stock that has been going up feels terrible.

When Marcus (from the opening story) was sitting on tripled gains, selling felt like leaving money on the table. His identity was tied to the company. His pride was tied to the stock price. Selling felt like admitting the run was over.

This is real. It’s why people hold Shopify from $200 down to $40. It’s why Nortel employees rode the stock from $124 to $1. Here are some mental frameworks that help:

“Would I buy this stock today?” If someone handed you $50,000 in cash right now, would you put it all into your employer’s stock? If the answer is no – and for most people it is – then holding the stock is the same as buying it. You are making an active choice to keep that concentrated position every single day.

“I’m not selling my company. I’m upgrading my portfolio.” You are not abandoning your employer. You are moving from a concentrated bet to a diversified global portfolio. Your employer is still in there (see Section 12). You are just adding 9,000 other companies alongside it.

“No one ever went broke diversifying.” There will always be a stock that outperforms XEQT over some time period. But you cannot predict which stock it will be, and the cost of being wrong with a concentrated position is catastrophic.

If you’re struggling with this decision, read our guide on the sunk cost fallacy – it applies whether your stock is up or down.

14. Putting It All Together: Your Action Plan

You know the theory. Here is your concrete action plan.

This week:

• Calculate your current company stock concentration (Section 9)
• Decide on your target allocation (ideally under 5-10%)
• Open a Wealthsimple account if you don’t already have one

This month:

• Set up the sell-at-vest pipeline for all future RSU vests (Section 11)
• If you have a large existing position, create a phased sell schedule
• Confirm your TFSA contribution room on the CRA My Account website

Every quarter going forward:

• Sell vested RSUs or exercise-and-sell options
• Transfer proceeds to your investing account
• Buy XEQT in your TFSA first, then RRSP, then non-registered

Once per year:

• Do a full portfolio review to check your concentration ratio
• Confirm you’re on track with the annual portfolio checkup

The beauty of this system is that it’s boring. Boring is good. Boring means you’re building diversified, long-term wealth automatically. Boring means you’ll still be financially secure even if your company has a bad year – or a bad decade.

Your equity compensation is one of the most powerful wealth-building tools available to Canadian tech workers. The key is converting that concentrated risk into a diversified asset. Sell at vest, buy XEQT, and let the decades do the heavy lifting.

This post is for informational purposes only and does not constitute financial, tax, or investment advice. Tax rules around RSUs and stock options are complex and depend on your specific situation. Consider consulting a tax professional or fee-only financial planner for advice tailored to your circumstances.