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ToddMcFool I have worked for ABT for over 7 years and have several thousand shares of ABT stock in my 401k portfolio. In fact, I have always invested 100% of the max. allowable pretax money into my companies stock. We always have had three other mutual funds at Putnam to choose from that I refused to invest in because I thought it would not be foolish.
They recently added a Putnam S&P 500 index fund and an international fund. From all the foolish info I have read, I am starting to get concerned about having all my money go into my employers stock; despite the excellent historical performance of ABT.
I am now splitting my current biweekly contributions 50/50 bewteen ABT and Putnam S&P 500.
Should I be selling shares of ABT as it starts to rise over $35 or $40 and put that money into the S&P500 fund?
What is a good overall ratio of ABT and the S&P 500 fund to aim for overall if I plan to retire in about 25 years?

So you're somewhere in your 30s, from the sound of it. Do you have any other investments besides these in the ABT 401(k) plan? Any stock options that might make you even more concentrated? Final question -- what's your job (not asking a specific title and, of course, you needn't answer in public anyway).... my point is that the reason companies like to encourage employees to invest in the company is that all of us, as employees, have the opportunity to influence, especially over the course of 25 or more years, the value of that stock. Some people more than others....... and from the sound of things ("...have several thousand shares" after only 7 years) you may be one who can make a meaningful difference ......

Diversification is a good thing, as I've started to appreciate all the more recently. But I know I read recently someplace, that diversification is also overrated. The point being made was that creation of wealth comes from concentration on a good investment, an investment that grows; preservation of wealth is achieved through diversification. I hadn't seen it put that way before, but it's an observation that is readily confirmed. (Consider the many on the Forbes 400 listing...)

This isn't to say that you should put all your eggs into one basket, but it is to say that having a disproportionate amount of stock in your own employer isn't ipso facto a bad strategy. The common wisdom on diversification doesn't really adequately address that situation. (IMHO, of course)

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