As you find yourself at, near, or in retirement, it is extremely important that you take stock or ownership in your investing strategy. In addition, you’ll want to find and work closely with a trusted financial professional to routinely review and potentially modify your investment mix.
First, it is important to look at your employer’s stock because you want to make sure you don’t have too much of your investment with them. Most likely, you already depend on your employer for salary, benefits, pension, and sometimes even health insurance in retirement. While you may feel comfortable investing in your own company at such a high rate, this allocation should be reviewed and potentially reduced to a far lesser percentage of your net worth. Diversification is key to minimizing unsystematic risk associated with investing in one company/industry.
Next, you will want to look at your current allocation of stocks within your retirement investing strategy. While most of us spend hours searching for the best deals on other things, this sort of mentality doesn’t seem to follow when people invest in stocks. Falling in love with a particular company and its stock can be devastating to your retirement. This is because you will be more inclined to hold on to it for emotional reasons, which may lead you to hold on to it for too long. And, if this is the case you may miss out on gains you could have earned if you were looking at the stock based on its price and not the emotional value attached to it.
In the end, it is important to work with your trusted advisor to devise a plan that will determine if a stock is under/overvalued and if it makes sense to add/remove it from your current investing strategy. If you are looking for security and performance from your retirement investments, then we encourage you to request your free download of our investment management guide. Remember, you will need to save enough and put your savings to work for you and your retirement.