October 12, 2013
What can the average investor learn from Enron, Lehman Brothers, and WorldCom when handling their 401(k) accounts?
What can the average investor learn from Enron, Lehman Brothers, and WorldCom when handling their 401(k) accounts?
NEVER put all of your retirement money into one stock Keep your money in diversified index mutual funds that own thousands of individual stocks; not one.
You are correct, Katherine. Let’s recap.
Never place all of your retirement funds in your company stock no matter how many people tell you to do it. Ignore the board of directors and ignore Joe in the break room who are telling you how rich you can become by riding the stock upward. That is a risk you cannot afford to take.
You may very well be riding it downward. Just as Katherine stated, focus on owning index mutual funds that own thousands of individual stocks, not one. This diversifies your risk and that means you won’t find yourself without a job AND without a retirement fund.
When your company provides you matching money in their own stock, sell it as soon as you are allowed and buy those index mutual funds. It’s that simple. Diversify your risks away.