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Why is loading up on my own company's stock in my 401(k) risky?

Concentrating your retirement savings in employer stock doubles your exposure to a single company — and that's the danger. If your employer hits hard times, you can lose both your paycheck and a big chunk of your nest egg at the same time, exactly what happened to employees in famous corporate collapses. Diversification is the core defense against this; spreading money across many companies and asset classes means no single failure wrecks you. A common guideline is to keep any single stock, including your employer's, under 10% of your portfolio. If matching contributions or an ESPP keep funneling you company shares, periodically sell some and reinvest in diversified index funds — mindful of taxes and any holding requirements. The exception worth checking is the NUA tax strategy for highly appreciated shares. Review your concentration at wealthserene.com/tools/net-worth.

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Educational disclaimer. Everything on WealthSerene.com is educational and is not investment advice. Projections and calculations are illustrative; actual results depend on market conditions, your situation and factors outside this tool’s scope. For a decision specific to your situation, consult a qualified financial professional. View full disclosures