Dangers of Company Stock
Sunday July 20, 2003
Mutual Fund Guide Dustin Woodard recently reported that "retirement plan participants are putting 42% of their money in their own company's stock." See his Dangers of Company Stock for more details. Buying stock in the company you work for defies all economic logic.
Generally when people invest, they want the highest reward with the lowest risk. By buying stock in your own company, you're putting all your eggs in one basket. If that company goes bankrupt you will no longer get a company pension, your stock will be worthless, and if it is a large employer in your town your real estate will decline in value as more people will leave the city than enter it. Why take that risk?
Generally when people invest, they want the highest reward with the lowest risk. By buying stock in your own company, you're putting all your eggs in one basket. If that company goes bankrupt you will no longer get a company pension, your stock will be worthless, and if it is a large employer in your town your real estate will decline in value as more people will leave the city than enter it. Why take that risk?
Comments
No comments yet. Leave a Comment