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What’s in Your 401(k)?

Loaded up on your company stock? I hope not. You see, one of the basic mistakes I see in many clients’ investment portfolios is the (too) large amount of their own company stock, especially in their 401(k) accounts. You might think that you’re close enough to the business that you will get out before the stock would ever tank. If so, you are one of the select few. Your ongoing employment and stream of income is tied to your job, to protect yourself, you should consider limiting your company stock to no more than 5% of your portfolio’s value. Compare one blue chip company, Motorola, to the S&P since the beginning of the decade:

Now, to be fair, there are countless stocks that have kept up with or exceeded the S&P, but this is an example of one not so fortunate. S&P down about 10% (up, if you include dividends), but MOT down close to 80%. (Note, I added EMC as well, down 70% for the decade to offer another example.)

Joe

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