Be Careful Owning Your Employer's Stock

Many companies offer a stock purchase program for their employees. Often such a program is part of the companies' long-term retirement program and employees are encouraged to participate. Some plans offer stock at a discount and the employer may match the employee's contribution. Obviously, if the company is successful over the long term, its stock will do well and employee shareholders benefit. But if the company falls on hard times and the stock falters, employee shareholders can suffer a double whammy - the stock price falls, and if things get really bad, workers can lose their jobs.

So if you participate in a employee stock purchase program, be sure to make your investments just a part of an overall diversified investment program. Don't overload your portfolio with your companies' stock. Treat that stock no differently than any other investment - buy the stock on its own merit not just because you work for the company.

Posted January 31, 2006.