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November 27, 2017

Don’t Get Overinvested in your Own Employer

This is just a friendly word of caution about putting all of your eggs in one basket. I’m over-invested in one place right now, and it’s my own employer.

Current

I started at General Electric (GE) about a year ago. I wanted to have stock in my company, so I started buying GE shares on Robinhood. As you might have seen, GE stock is doing terribly, and I’ve lost over $400 on my shares so far. My first share was bought for $30. Shares dropped into the $17 range recently. I also put a certain amount of my 401k contribution into a GE stock fund, about 10% of my contribution amount (which is maxed at $18,000 per year). That portion of my contribution is down about 30%! And worst, GE pays my paycheck. GE is not doing so hot right now, with talks of layoffs, selling businesses, cost cutting methods, etc. So I’m at a small risk of losing my paycheck, plus my stocks and part of my 401k are underperforming.

Looking Ahead

My division is in talks of being sold. I will likely retain my job, as I’m good at it, it saves the company a ton of money, and do it for a low price compared to others with the same skills. However, in the next year or so, my paycheck will likely not come from GE. I do think that GE stock will be a great long term investment, as I won’t sell those shares for 40 or more years, and they will continue to pay dividends, even though there was a recent major dividend slash. GE stock is at a great price right now, and I’m happy to be buying more shares and accumulating them in my 401k as well. The upside is a few years out, but I’ll be patient.
Anyways, just a small word of advice on not to get too invested in the success of your employer!