Reallocating My Fiance's 401k
I finally got around today to looking at the investments in my fiance's 401k. It underperformed last year and both of us have been meaning to adjust it. While we made quite a few changes, the main change we made was:
Lowering her ongoing contribution to her company's stock. This was at 15% of her contribution and we lowered it to 10%. Don't get me wrong, her company is great, it is profitable and it is growing. But I just don't feel safe with too much money in there. We already have ourselves vested in her receiving a salary from there, plus she just recently received some stock options too, so I don't want us too tied to her company's performance. In addition, as great as her company is, the stock just doesn't perform. It is sort of stagnant. I think eventually that we will lower this amount to 5% or 8%. Remembering the people of Enron who had 100% of their 401k company stock and losing everything really scares me.
Ultimately, we are just trying to achieve a 10% return to hit our retirement goal. Hopefully the changes we made today will work out.
posted by Please Read @ 12:21 AM
4 comments
4 Comments:
I think you are very smart in lower her asset allocation in company stock.
Here in Houston, it is amazing how many people got 'financially destroyed' because all the eggs were with Enron!
-Medicated
Hm, you know, I never thought of having a job with your company as one line of investment, but that's definitely tied into your financial wellbeing!
Medicated - It was very sad what happened to all those people at Enron. The Enron situation has changed my job as a CPA forever. The sad part is, most people think that their company's are great until it is too late.
Miniducky - It's weird to think about it that way, but if something happened to her company, we would lose:
1) Her income
2) Her stock in the 401k
3) Her stock options
It would be a big setback.
Oh, I agree completely. It's a very good idea to consider that diversifying your investments should always keep in mind that you already get a salary from the company and that you need to be very financially flexible in case you lose your job.
Post a Comment
<< Home