What max percentage of my investments should I put into my own company’s stock plan?
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Shasta McNasty 2007 asked:
My company offers an employee stock purchase plan (15% off). Since the Enron implosion, I’ve read it’s not a good idea to invest a large amount of one’s money into your own company (or any one company, for that matter). What maximum percentage of my investments should I put into my company? Right now I’m putting about 15% of my annual investments in my company.
VAN
My company offers an employee stock purchase plan (15% off). Since the Enron implosion, I’ve read it’s not a good idea to invest a large amount of one’s money into your own company (or any one company, for that matter). What maximum percentage of my investments should I put into my company? Right now I’m putting about 15% of my annual investments in my company.
VAN
October 23rd, 2009 at 4:58 pm
JARED
Usually there is a max on these. Like 200 or 300 shares a year. I would say buy all of that, you are making 15% instantly. Don’t let a few bad companies scare you. But I wouldn’t buy anymore than what I get at the discounted price.
October 25th, 2009 at 3:40 pm
TERRELL
Some companies match 100% of the employees contribution up to 8% of the employee’s salary (Honeywell for example). In this case, you should put the entire 8% in and evaluate if you want to leave it in company stock or move it to one of the other options.
If your company ONLY gives a 15% discount, then I would only invest (contribute) ONLY if the stock fundamentals and technicals were good.
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October 29th, 2009 at 2:57 am
MITCHEL
depends on the financial strength of your company.
15% is high, but depending on the above probably ok.
How long before you can sell them and diversify into something else?
October 29th, 2009 at 9:58 pm
FRANK
There of course is the possibility that your company might at some time undergo severe economic circumstances. You need to keep that in mind. 15% is approaching the top end that I would consider appropriate for ones resourses in any one investment. Remember the possibility does exist that you could loose it all. Personally, I would ease back to about 10%.
It is however very appropriate to have an investment in the company that you work for. Do not think that management is unconcerned with which employees think enough of their company to invest in it.
November 2nd, 2009 at 7:30 am
STEVIE
If you are not in a position to make major decisions for your company, then I would definitely put less not more in the company (despite the 15% discount). Second, before putting ANY money in, I would do research on your own company as if it were any other company. Find out if it’s in financial trouble, what type of competition you’re looking at, etc. The reason being… you not only have your investments tied to this company but also your livelihood. Should your company run into financial trouble, you’re out of a job AND your wealth goes down.
I would say 15% is on the high side and would feel more comfortable with a 10% max though. However, it’s how good you feel. Can you sleep at night?
November 5th, 2009 at 7:38 am
EVERETT
Since the Enron issue, you are right there has been alot of talk. Because you not only “work” there, but your personal investments are there too if something should go wrong with the company ie Enron. Government has tried to pass a law since Enron stating that nobody can put more than 25% of their annual salary in Employee stock, but it never passed given that people can do what they want with their money.
As a Financial Advisor, the golden rule to tell people is no more than 20% of your total investable assets in your company at work. Find out if they match your retirement assets with stock or cash and you will get a better idea of your holdings in that company. I know its tempting, with the low transaction costs(commissions) and the 15% off discount and the fact that you know something about the company because you work there.
If you have no other investments really except for the stock of your company, then your exposure will be higher than the 20%. This is important, look at your holdings and diversify. Good luck.