If you currently work for a publicly traded company, there is a good chance that you own some of their stock in your 401(k). You may even have incentives from the company to own more of it. In fact, some companies make their matches or profit sharing contributions in their own stock which just increases your exposure.
So, is owning your company stock a good thing?
The short answer is NO. Your salary is already a huge personal exposure you have with that one company; do you really need to double down
In a recent post, Josh Brown highlighted the fact that since leaving Microsoft, Bill Gates has steadily decreased his holdings in the company down to 20%.
“….here the second richest man in the world shows us the value of knowing when to walk away, no matter how sentimental or close to you an investment once was. To say nothing of the value of spreading out the chips just in case a once-great investment turns into a mess on someone else’s watch.”
We as investors cant control the directions of the market or any individual company; however we can control the amount of risk we are taking. So, take a look at your next 401(k) statement and make sure you aren’t taking any unnecessary risks. The future “retired you” will thank you for it!