Employees are encouraged to participate in these plans and given incentives to do so in some cases. But is it a good idea?
The answer is yes and no. Like most things in life, if done in moderation, purchasing stock in the company where you work is a good thing especially if the company sweetens the deal through a match program in your 401(k) or some form of discount.
Besides, if you dont have enough confidence in the company you work for to own its stock, you might want to re-examine your career path.
Heres where the problem comes in: Too much of a good thing can lead to disastrous results should something bad happen to your company.
If the news of employees losing substantial portions of their retirement nest egg because it was tied up in company stock that went south sounds familiar, think back a few years to the Enron fiasco.
When the energy-trading giant collapsed, many of its loyal, honest employees lost their entire retirement account because they had been encouraged to buy Enron stock.