Should You Invest in Your Company Stock?
Don’t forget about maintaining diversification in your invested savings
You work at a great company that’s going places. In addition to a generous 401K, you have additional opportunities to receive more company stock. Should you buy more?
Usually, it’s best to maintain diversity in your portfolio and NOT purchase additional stock from the company you work for
Your paycheck represents a significant income stream. You may also have additional stock in the form of stock grants and stock options. By buying more stock you are overinvesting in your company.
If things go south, not only is the company stock value in jeopardy but your job, and the income stream it represents may also be in jeopardy.
Just ask the folks that used to work for Enron or Lehman-Brothers, or even GE.
If you work for a big company, odds are it may already be part of the S&P500. You’re already invested if you hold index funds.
As always, there are exceptions.
Buying company stock within your 401K
Most 401K plans include an option to invest a portion of your savings in the company stock. Traditionally, companies assumed you would work…
