Do not overinvest in your company stock

Do not over-invest in your company stock

If you happen to work for a large, publicly traded company, your plan will also offer you the chance to invest in your company’s stock. If it does, please resist the temptation to overinvest - no matter how great you think your company is.

In recent years, too many overly loyal employees have lost their entire nest eggs because they invested all their retirement money in their own company’s stock. Keep in mind names like Enron, WorldCom, and Lucent Technologies. Until the roof fell in, everyone thought these companies were sure things - no one more than the people who worked for them. You should never invest more than 25% - and if you want to be conservative, not more than 5% - of your retirement money in your own company’s stock.

Consider your company’s stock to be an aggressive growth investment (even if it is a conservative company). This is because owning a single stock reduces your diversification - and therefore, increases your risk.