» Stock Trading Strategies and Systems » Purchasing Your Company’s Stock

Purchasing Your Company’s Stock

Today most of the employers provide their employees with the opportunity of purchasing stocks of the company. This may be offered as a part of a retirement plan program or just as a way to increase the employees' feeling of belonging to the company.

In order to increase the employees' participation, employers provide different incentives, such as contribution matching. Nevertheless, many specialists question the reasonability of such investment activities.

The purchase of a stock of the company you are employed in has its advantages. For example, as mentioned above many employers provide contribution matching, which allows for the faster growth of your assets. Additionally, many employers offer the purchase of stocks at discount.

If you don't feel comfortable with the purchase of your company's stock, then you should reconsider whether you are willing to continue to work for this company.

No matter what your decision is, you should not invest too heavy in your company's stock. Diversification is the key, because it will insure you to a certain extent against a bad event in the industry.

For example, if you choose to invest heavily in stock of your company and the latter experiences a major down in its performance, you not only risk losing your job, but also the assets you have invested. If you have included the stocks in your retirement plan, the assets you have allocated for your retirement may be lost as well.

Final Piece of Advice

Most financial specialists advise that a viable portfolio should not include more than 10% to 15% of a one stock type, no matter of which company it is.

You should not overlook the stock investment option offered by your company. However, don't let it obsess your portfolio despite the benefits that are offered. No matter what arguments for the purchase of your company's stocks are provided, the too persistent push at buying more of it is something that may harm you.

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