Too Much Company Stock in Your 401(k) Could Be Dangerous
Corporations often offer their own company stock inside their retirement plans and many employees take advantage of this opportunity. But can this be too much of a good thing? Can employees end up overweighted in their own company? Diversification is one of the best solutions for weathering the ups and downs in the stock market. What many people don’t realize is by purchasing their own company’s stock, they are lessening their diversification. Employees are betting their career and their retirement savings on the same company. This recent Fortune article, “Having Too Much Employer Stock in Your 401(k) Is Dangerous. Just Look at GE.” points out the ramifications of investing too much of your 401(k) in your own company’s stock.
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