Personal Finance

I bought NVIDIA's stock and my position is now almost worth $750,000 - should I sell and become a stay-at-home mom?

Kristin Hitchcock

Published: December 14, 2024 12:40 pm

24/7 Wall St. Key Takeaways:

• Making the decision to retire early or not is a highly personal one that’s dependent on both mental and financial readiness. 
• We never recommend holding all (or most) of your portfolio in a single stock, even one that’s as lucrative as NVIDIA.
• Also: Take this quiz to see if you’re on track to retire ^(Sponsored)

In a recent Reddit post I came across, the poster sparked an interesting discussion about selling a substantial stock position in NVIDIA (NASDAQ: NVDA) to retire early and become a stay-at-home mom. 

With 500 shares of NVIDIA at the time of the post—equivalent to 5,000 shares after a 10-to-1 stock split—this user’s scenario raises key questions about managing a valuable single-stock position. It also allows us to look at balancing financial security with family priorities. 

Let’s take a look at the poster’s background and situation before we jump into my opinion on the matter. Of course, remember that this article is my opinion and not financial advice.

The Background

The user, a 43-year-old mother of a toddler, owns a significant stake in Nvidia and is considering selling it to fund her goal of financial independence and early retirement. She and her husband, who is also in his early 40s, want to focus on being present parents while ensuring financial security for retirement and long-term care.

Luckily, her husband’s income can cover their living expenses and retirement contributions. Plus, they have no debt except the mortgage. 

This post allows us to talk about a few key topics:

• Deciding When to Sell a High-Performing Stock
• Transitioning from a Career to SAHM
• The Importance of Diversification and Long-Term Planning

1. Selling a High-Performing Stock

Nvidia is one of the leading players in tech and AI, and owning a significant share position can be a highly lucrative asset. However, I never recommend relying on a single stock for financial security, as it carries a huge risk. 

The question of whether to sell the NVIDIA stock depends on several factors:

• Current stock market position: NVIDIA has experienced strong growth for several years, but the stock market is not stable. Holding a concentrated stock position ties your wealth to a single company. Still, we do forecast that NVIDIA will keep growing. 
• Potential gains vs. future losses: Selling a portion or all of this NVIDIA stock to diversify into index funds could reduce risk exposure. A diversified portfolio is generally considered safer, especially for those aiming to secure a consistent financial future without undue stress from market fluctuations.

2. Transitioning to Stay-at-Home Parenting

The mental transition out of the workforce is often harder than many people consider. I’ve covered tons of situations where people who had saved their whole life to retire suddenly got cold feet. Many people get a lot of their self-worth from retirement, and suddenly taking all of that away is a big deal! 

Plus, there are some financial complications from becoming a stay-at-home mom. Living off of one income is almost always harder than living off of two, if only because there is less flexibility. 

• Evaluate opportunity costs: Selling off the NVIDIA stock would allow the poster to use the cash as a backup in case her husband’s job went south. It also allows for the reallocating of funds into a more diversified portfolio, which I recommend.
• Considering future needs: You can never know exactly what the future may bring, but you can always make an educated guess! Transitioning from a dual-income household to a single-income one can be hard, but it isn’t impossible. Still, it’s important to plan for expenses like healthcare and education costs. 

3. Importance of Diversification and Long-Term Planning

Financial independence is a significant milestone, but it’s just as critical to maintain long-term financial stability once achieved. I recommend the poster sell her NVIDIA stock and reinvest the money into a diversified portfolio to reduce risk and make the path forward a bit steadier. 

A more stable stock, like an index fund, would be a good direction to look in. These funds provide broad exposure, mitigating the risks of holding a single stock. 

The poster should also explore a sizable life insurance policy and long-term care funds. Consulting a financial advisor could also help clarify their retirement funding options, estate planning needs, and tax strategies.