Thursday, July 10, 2008

One Basket

TowersThe dropping stock market was the topic of the day among my friends. Some of them have been buying discounted shares of their employer's stock through stock purchase plans. A few of them have been buying shares of their employer on the open market too. They aren't very happy with that decision anymore.

I think discounted purchase plans can be a great deal, but I wouldn't invest more than I can afford to lose. Remember that your employer is already one source of income -- you don't want to tie your income, savings, and retirement funds to the same source. Losing your job and savings on the same day would feel pretty rotten.

Just because you might feel that you have insider information on your employer doesn't mean that you're a better judge about the stock than anyone else. As one engineer friend recently said: I've seen a lot of great products that didn't go anywhere.

Diversify. Buy index funds. Do research. I suggest starting with I Will Teach You to Be Rich.

No comments: