Meet Sarah
Senior Engineer · Large-cap tech · High conviction
$1M
Position
$150K
Cost Basis
$850K
Unrealized Gain
$0
Income / Year
She believes in the stock. She won't sell. But she's earning nothing from the position. What are her options?
| Hold | Sell | Exchange Fund | Embark | |
|---|---|---|---|---|
| Total Value | $1.65M | $1.1M | $1.47M | $2.15M |
| Cash Earned | $0 | ~$20K | $0 | $500K |
| Tax Paid | $0 | $315K | $0 | $0 |
| Keeps Stock? | ||||
| Lock-up | None | None | 7 years | 3 years |
Scroll down for the full story behind each path ↓
Sarah keeps her $1M. Doesn't sell. Doesn't do anything. Just holds.
Stock rises 15%
Position: $1.15M. Cash earned: $0
Stock crashes 45%
Position: $632K. She watches $518K evaporate. Cash earned: $0
Recovery begins
Position: $870K. Still below start. Cash earned: $0
Stock surges 80%
Position: $1.57M. Conviction vindicated — but cash earned: $0
Flat year
Position: $1.65M. Five years. Zero income. Zero cushion during the crash.
$1.65M
End Value
$0
Cash Earned
-45%
Max Drawdown
Her advisor says: "Reduce risk. Diversify." Sarah sells.
Reinvests $684,650 — needs 46% gain just to get back to $1M.
Reinvests $685K in index fund
Index returns 10%. Portfolio: $753K. Still well below where she was.
Slow and steady
Portfolio: $911K. Meanwhile, the stock she sold is up 57%.
Finally recovers — barely
Portfolio: $1.1M. Up 10% from original. Had she held: $1.65M.
$1.1M
End Value
$315K
Tax Paid
−$550K
vs Hold
Sarah contributes her $1M to an exchange fund via §721. No tax — but she gives up her stock permanently.
$1M
Contributed
$0
Tax
7 yrs
Lock-up
20%
In Real Estate
Diversified pool grows steadily
Portfolio earns ~8% (market returns minus fees). Value: $1.08M. Cash: $0. Sarah's original stock rose 15% — but she no longer owns it.
The crash — but diversification helps
Her old stock crashed 45%, but the diversified pool only dips slightly. Value: ~$1.10M. Cash: $0. Diversification worked — but she can't access any of it.
Steady growth continues
Value: $1.22M. Cash: $0. Four more years until she can touch it.
Her old stock surges 80% — she misses it
Pool returns 8%. Value: $1.34M. Meanwhile, holders of her stock are at $1.57M. The cost of giving up a winner.
Growing — but still locked up
Value: $1.47M. Cash earned: $0. Two more years locked. 20% stuck in illiquid real estate. She traded a winning stock for a diversified portfolio she can't touch.
$1.47M
Portfolio Value
$0
Cash Earned
2 yrs
Still Locked
Sarah contributes her $1M to an Embark SPV via §721. No sale. No tax. Starts earning.
$1M
Contributed
$0
Tax
100%
Invested
Income starts flowing
Stock +15%. Position: $1.15M. Income earned: $100K
The crash — but with a cushion
Stock −45%. But she's already banked $200K. Not panicking — getting paid.
Recovery + compounding income
Position: $870K. Total income: $300K. Reinvesting some into other assets.
Conviction validated
Stock surges. Position: $1.57M. Total income: $400K. She held because she was earning.
The full picture
Position: $1.65M + $500K income collected. Held conviction and got paid.
$2.15M
Total Value
$500K
Cash Earned
$0
Tax Paid
| Hold | Sell | Exchg Fund | Embark | |
|---|---|---|---|---|
| Starting Capital | $1.0M | $685K | $1.0M | $1.0M |
| Keeps Stock? | ||||
| Cash Earned | $0 | ~$20K | $0 | $500K |
| Tax Triggered | $0 | $315K | $0 | $0 |
| Lock-up | None | None | 7 years | 3 years |
| Total Value | $1.65M | $1.1M | $1.47M | $2.15M |
15-minute call. See what Embark could look like for your position.
This is a hypothetical illustration for educational purposes only. The scenario, characters, and numbers are entirely fictional and do not represent any actual client experience or guaranteed outcome. Actual results depend on market conditions, option premiums, strategy execution, fees, and other factors. Income targets are not guaranteed. All investment strategies involve risk, including the potential loss of principal. Past performance is not indicative of future results. Tax impacts vary by individual situation — consult a qualified tax advisor.
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