Many workers are tempted to buy shares of their employer's stock. After all, you may know the ins and outs of your employer's business better than you understand any other company, and many companies make it possible for workers to buy employer stock within retirement plan accounts like 401(k)s, sometimes even at a discount.
In the following video, Motley Fool investment planning editor Lauren Kuczala talks with longtime Fool contributor and financial planner Dan Caplinger about the pros and cons of owning employer stock. As Dan notes, the main problem with owning too much employer stock is that you tie both your current salary income and your long-term investments to the same company, which can be disastrous if something bad happens to your employer. With companies like Ford (NYSE:F) having put limits on how much company stock you can own in their 401(k) plans, your smartest move is to keep your ownership of your employer's stock to a minimum and have a well-diversified investment portfolio.
Neither Fool investment planning editor Lauren Kuczala nor Fool contributor Dan Caplinger has any position in any stocks mentioned. You can follow Dan on Twitter @DanCaplinger. The Motley Fool recommends Ford. The Motley Fool owns shares of Citigroup and Ford and has options positions on Chesapeake Energy. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.