Should I Invest In My Own Company’s Stock?


Should I Invest In My Own Company’s Stock?

You will get many different answers on this question from your friends and co-workers. Here is the bottom-line: You already have an enormous portion of your retirement linked to your current employer. Your income, and future income, are all linked to your current employer’s well-being. Think, for a moment, what would happen if your company went out of business. You would instantly lose your income, your future income, along with any stock options you held at the company. Isn’t that enough of an investment? Now, if someone were to have 50% of their 401K in their own company’s stock, they would also lose 50% of their retirement nest egg immediately. In my personal opinion, you have enough invested in your own company the day you begin working there, so you should not invest in your own company within your 401K.

NOTE: The one exception, that I would make sure to point out, is when you are offered a match on your company’s stock (and not on other investments), or when you have an opportunity to purchase the company’s stock at a discount to the current stock price. In these unique scenarios, it makes a lot of sense to temporarily hold your company’s stock for the duration required to obtain the benefit.

Retirement Junkie is a website that the Hagopian Institute put together as a source for free information to help people prepare for retirement.  Please visit retirementjunkie.com, and follow MrEmergingMedia on Twitter for more retirement tips, along with other fun offerings from Todd Hagopian and the Hagopian Institute.

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About Todd Hagopian (@ToddHagopian)

Todd Hagopian received his BA from Eastern Michigan University with a major in Political Science. After graduation, he worked as a Financial Advisor and a Bank Manager before returning to school. He attended Michigan State University, where he completed an MBA with a double-major in Finance and Marketing. Todd is now a Senior Product Development Manager for a Fortune 500 company. He frequently writes about business issues, social media strategy, and political issues that he finds important. Enjoy the blog!

Posted on December 27, 2011, in Investing and tagged , , , , , , . Bookmark the permalink. Leave a comment.

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