How much company stock should I carry

[Goldy]

Is there a general concensus on how much company stock your portfolio should be composed of? I know its risky for a number of reasons, the biggest is that if the company does poorly you could not only lose your job but your stock could be worthless too.

Any thoughts?

[disneysteve]

Company stock shouldn't exceed 5-10% of your portfolio. Really, the same goes for any single company but as you said, the unique problem with company stock is both your investment and your income are tied to the same company.

[kork13]

Not really much more to say than DS already has... holding no more than 5-10% (max) in your company's stock is the general guideline given, and in this case, the rule of thumb is a good one.

As an example, just think about it this way... in the rest of your portfolio, you might have a couple various mutual funds, such as a S&P500 fund like VFINX. As you can see in that link, even their heaviest-weighted stocks (Apple & Exxon-Mobil) are only 4.8% and 3.3% of the fund's holdings. The rest are all below 2%. I understand that the comparison isn't perfect, but it gets the point across... If you were to hold 15%, 20%, or more in your company stock, you would be betting your portfolio so heavily on it being the next "Google-in-the-making." Unless you're confident in that fact, you should definitely be wary of holding too much in your company's stock.

[WallStreetTrades]

stock

To properly diversify in individual stocks you need around 30 positions and a good cut-off is at least $100,000. If you don't have that much assets a better option is ETF's. Brokerage fees will hurt your portfolio if you don't know what your doing. I highly recommend this book if you are interested in learning more: The Power Curve, by scott kyle.

[disneysteve]

To properly diversify in individual stocks you need around 30 positions and a good cut-off is at least $100,000. If you don't have that much assets a better option is ETF's. Brokerage fees will hurt your portfolio if you don't know what your doing. I highly recommend this book if you are interested in learning more: The Power Curve, by scott kyle.

Other than promoting your book, what's your point? This has nothing to do with OP's question.

[Wino]

If your company is named "Enron," then zero is the right amount.

[thesimplemoneyblog]

Company stock shouldn't exceed 5-10% of your portfolio. Really, the same goes for any single company but as you said, the unique problem with company stock is both your investment and your income are tied to the same company.

I think DS stated this appropriately. I am assuming your company's stock is a large company, but there could be some additional risks and concerns if the stock is either thinly traded or not traded on an active market. The very time you may want to sell it may be when others are trying to unload the stock as well. Unless you are the owner, CEO, or other important decision maker, it is often best to try to minimize your exposure to your company's stock since you would have little or no real control of the organization to redirect or reorganize the company should something dire occur.

[amarowsky]

What company do you work for? That should have some bearing on people's advice for this question. And what sectors are the other investments in?

[disneysteve]

What company do you work for? That should have some bearing on people's advice for this question.

The name of the company wouldn't alter my advice a bit. I'd still say no more than 5-10%.

[justinedwards]

Go between 5-8%

I would go between 5-8%. Its better to be on the safer side.

[Ramose]

I would go between 5-8%. Its better to be on the safer side.

Depends what you mean by 'better'. Some might call a riskier and more profitable investment better than a safer option which has a lower return.

[amarowsky]

The name of the company wouldn't alter my advice a bit. I'd still say no more than 5-10%.

Although it seems more rare now, companies in the past have offered some amazing stock options and discounts that depending on the situation would merit a lot more investment than 10%

http://www.forbes.com/sites/alanhall/2012/08/21/give-your-employees-stock-options/

[disneysteve]

Although it seems more rare now, companies in the past have offered some amazing stock options and discounts that depending on the situation would merit a lot more investment than 10%

Stock Options: A Strategic Weapon For Growth - Forbes

If you are being given stock (or options to buy stock), that's different since you really have no control over that and it doesn't cost you anything. I don't care if 80% of your portfolio is company stock in that case since if the stock drops to zero, you are no worse off than you were and it hasn't actually cost you anything.

The 5-10% rule is if you are buying the stock yourself.

Now if you are able to buy stock at a discounted price and your company is in solid shape, go ahead and buy it. Hold it for the minimum time and sell it to pocket the profit.

[Goldy]

If you are being given stock (or options to buy stock), that's different since you really have no control over that and it doesn't cost you anything. I don't care if 80% of your portfolio is company stock in that case since if the stock drops to zero, you are no worse off than you were and it hasn't actually cost you anything.

The 5-10% rule is if you are buying the stock yourself.

Now if you are able to buy stock at a discounted price and your company is in solid shape, go ahead and buy it. Hold it for the minimum time and sell it to pocket the profit.

Thanks Steve,

We currently have a program where we contribute money each month and they buy stock quarterly with those funds. The company (within top 200 global ranking) matches the stock at a 1:1 rate but it doesnt vest for 3 years. If I quit before 3 years I lose the match but should I get laid off I become 100% vested. The max in 5k per year for me and the wife (work at same company) so I would like to max both out. Essentailly the value of the stock would need to drop by 50% to lose money and since I have no plans to move jobs it seems like a good deal.

[disneysteve]

Thanks Steve,

We currently have a program where we contribute money each month and they buy stock quarterly with those funds. The company matches the stock at a 1:1 rate

The max in 5k per year for me and the wife (work at same company) so I would like to max both out. Essentailly the value of the stock would need to drop by 50% to lose money

That sounds like a pretty sweet deal - a 100% return on your investment. If you do max it for the 10K, what % of your income would that represent?