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I only own two individual stocks. I have shares in the company I retired from in my 401(k) and shares in my current company in my Roth IRA. Returns so far this year: 93% for my old company and 122% for my current employer. Did you ever buy stock in your employer’s company, and how long did you hold it?
ExxonMobil (XOM) used to match your 6% 401k contribution with 7% of XOM stock. So for the first 5-10 years I took the match in XOM stock, until post-Enron the policy was changed and employees could get a 7% match without taking it in XOM stock (which is what I did). I’ve held my shares of XOM now for some 25 years, though the plan is to sell them all over the two years via a NUA. Bottomline: Don’t own company stock, that way if your company faces significant financial difficulties. you don’t lose your savings as well as your job. If you don’t currently have any company stock, don’t start, if you do, think about an exit strategy.
My final employer was a profitable, well-managed company, but I always wanted our savings to be diversified. Every quarter, I’d sell vesting shares (which were already taxed at ordinary income rates) and invest the money in our retirement portfolio. I probably left a lot of money on the table over the past 10 years vs friends who have held on, but it could have turned out very differently when the company hit a bumpy patch. I had friends at IBM in the 1990s whose experience with the company’s first RIF left an impression on me about the importance of diversification.
Ken, this is Gene. Tax issues aside, my decision to buy or sell my employer’s company stock was no different from any other stock. I buy or sell when it meets one or more of various criteria I use for any stock, such as: do I think it has a favorable risk versus reward, do I have a better place to invest my money, is the stock is overvalued based on my assessment of future returns, is the stocks relative position in my portfolio larger than I want in a single holding, etc. etc. Unless one is a very senior manager making some other statement with their company stock ownership, I personally think it’s probably misplaced loyalty to feel one has to own stock in their employer’s company. That said, I can understand why someone might have sentimental reasons for wanting to own stock in the company they work for. It’s just not a sentiment I hold.
We sell RSUs as soon as they are vested, deduct taxes and invest the rest in an index fund. As for ESPPs, we wait for them to turn long-term (24 months after purchase) and sell them, pay taxes and invest the rest in index funds.
This way we dollar-cost average in and out of the company stock. It also helps avoid being concentrated in a single stock in taxable accounts.
this is Chris. We do, but it is not a huge amount. The basis is very low and it doesn’t give off dividends. We sold some of it earlier this year and are keeping our income low enough so we won’t have to pay capital gains. Ours is in a taxable account, not a retirement account. I am not sure about those? We will probably sell some more next year.
I too have only have two individual stocks, both are utilities paying good dividends in one case for over 100 years.
The shares in my old employer were acquired over many decades, but the bulk in my last five years working from stock options and restricted share incentive plans. I never bought the stock in the 401k plan, but many years ago in a discount stock purchase plan.
I reinvest all dividends and have no intention of selling any shares. I never sold any, but many years ago I gave shares to our children and in three cases bought them back when they were buying a house.