The 401K double whammy
A 401K is normally seen as a double-barrelled plus; you shield income from tax, and invest for your retirement. But what’s it invested in.
According to Hewitt Associates (through CNN Money), a sizeable chunk is in the employer’s stock. And more than 20% of the participants, have 50% or more of their balance in their own company’s shares.
That’s just asking for trouble. Even if your company doesn’t do an Enron, betting both current and future earnings on a single company is foolhardy. No amount of your knowledge of the company is going to shield you - and if you do happen to liquidate out just ahead of a crisis, you’re still susceptible to lose on account of insider trading.
Whatever happened to “Familiarity breeds contempt?”
Written by 2cworth on May 29th, 2006 with
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