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DON'T invest your 401k money in your own company

DON'T invest your 401k money in your own company
by Kaushik Sirkar, Chandler AZ REALTOR
Chandler Arizona Real Estate

I am by no means a financial consultant. I am not a retirement planner. I am not a stockbroker. I am a REALTOR. But every so often, I can't help but throw out some general financial 'suggestions'.

I just came across this article at money.cnn.com. It addresses employees of Countrywide suing their employer because their retirement accounts have dwindled - supposedly Countrywide misled them as to the status of the company's financials.

Here is what I have to say to everyone who works in Corporate America. DO NOT INVEST you 401k monies in the stock of your company. Didn't people learn from ENRON? You are already HIGHLY VESTED in not only your company, but also your industry sector simply through your job! Why increase your vesting even more by having 401k monies in your company's stock???

Thanks for Reading :)

Kaushik Sirkar, Chandler AZ REALTOR
Chandler Arizona Real Estate

Posted by Kaushik Sirkar on 09/13/2007 05:46 PM

Comments (6)

401k, countrywide

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6 Comments on DON'T invest your 401k money in your own company

SEP

2007

How true this is I guess people don't learn. But what do I do with my Enron stock now? Seriously If your 401k is invested heavily in countrywide stock you should be trying to help the company not sue them. Countrywide has always been a strong company I'm sure the stock value will come back.

I have been playing the stock market for many years now and one thing is to never fall in love with anything. Diversify your portfolio and don't get greedy, everyone needs a piece of the pie. Some other great companies at one time that have followed down the path of greed are...JCPenney, Worldcom, Lucent, and Anderson just to name a few. Many employees of these companies were heavly invested in the company 401 and lost a lot of money. Its too bad that as stock owners in the companies the little guy doesn't have more control. History does repeat itself!

SEP

2007

Are you suggesting that the folks who work(ed) for Countrywide did not learn anything from Enron?

Kaushik,

This is very good advice. I think a lot of companies have a limited set of options on their 401(K) plans. Also, they may be getting somekind of discount for heavily skewing the distribution towards their own stocks. I'm not inclined to say the employee is to blame necessariliy. I think companies share some of the blame as well.

Thanks,

SEP

2007

I couldn't agree more. I lost a bundle with the traditional mindset that says to be loyal to your company. Enron and other major debacles as well as my own admittedly much smaller but no less impactful financial collapse prove what another response also said. Don't be loyal and don't fall in love with any investment. It's business. It's money. It's supposed to be impersonal and un-emotional.

Kinda the same in real estate negotiation as well - fall in love and you'll pay too much.

hmm... you know falling in love pretty much assures you of paying too much no matter what part of your life we're talking about;-)

Best of luck to you in Arizona!

SEP

2007

Kaushik,

I agree. I worked at Intuit and they had a great stock option plan I purchased stocks at a discounted rate but I never put them in my 401k. I think they were about 3% of my investments while I worked there.

Mike

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