I have the option to buy company stock 'fund' shares in my 401K. I believe that the industry (Pharma) and the company is a winner long term. I also have and index fund in my plan : Spartan US Equity Index Fund.Should I allocate across the two or only buy the stock fund?
<< I have the option to buy company stock 'fund' shares in my 401K. I believe that the industry (Pharma) and the company is a winner long term. I also have and index fund in my plan : Spartan US Equity Index Fund. Should I allocate across the two or only buy the stock fund?>>awashco,As you probably know, the index fund is a big favorite around here. Certainly, buying only one stock is a very risky strategy. If the stock is a big winner, than of course you win big, but putting all your eggs in one basket is a strategy which very few would recommend. Of course your knowledge about the company may give you an advantage in evaluating its long-term prospects, but if this is your only or primary source of retirement investing, adding a healthy chunk of diversificatin through an index fund is a pretty good idea.Best of luck in your choice,Bill
Personal opinion - but what else would you expect.I wouldn't put my paycheck and retirement into the same basket. Even though the company may be doing fine now, what about X number of months down the way. If the company falls on hard times and you are the lucky one who gets down-sized and the stock value falls off the table, you don't have much to fall back on.Diversify into some investment that doesn't have any connection to your company, directly.Good Luck
I'd recommend to definitely split it! Too many people put all their eggs in one basket, their own company, and then if the company goes bankrupt, you lose both your job and your retirement package. If you have something in a fund, you at least have something.Of course if the fund is doing poorly and you can make better investment choices elsewhere, and have enough security, go ahead and put it in the company stock. But make sure you have a parachute if your company fails.
Thanks for the suggestions and excellent input. Thecompany is SB (SBH), so I think it's more likely to merge than go under.The only index fund I have in the plan is SpartanUS Equity Index Fund (FUSEX). What a ticker symbol,huh?Does this info make any difference?
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