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Clark Howard's Tips

September 14, 2007

How much of your retirement money should you put into your employer's stock? Not one single cent, according to Clark.

Clark recalls when he first learned that companies were pushing their workers to put their 401(k) money in employer stock or only offering the company match when employees invested in their stock. It was back in the 1990s and he was speaking about retirement savings at a tech company.

When he started talking about employer stock, there was a murmur that ran through the crowd. It turned out almost all 600 employees put a big chunk into their company stock. When the dot.com era went bust, those workers lost 90 percent of retirement savings.

More recently you had the same thing happen during the Enron and WorldCom scandals.

The latest news in this arena now comes from Countrywide Home Loans. The nation's largest independent mortgage lender is facing a lawsuit because it required employees to receive their match in company stock.

Countrywide also allegedly pushed employees to put their own money in company stock. As the mortgage mammoth's profitability has declined, its employees' retirement stashes are now in danger.

Why the SEC hasn't outlawed company stock from retirement options is beyond Clark. He advises people who have been contributing to company stock to stop, and instead put their money in a targeted retirement portfolio option. This will adjust your risk based on the years you have left until retirement.

Half of your money should be in a total stock market plan, so you don't have all of your eggs in one basket.

You may also want to check out some overseas mutual funds since the capitalist market is expanding abroad rapidly. Clark wants you to spread your retirement investments among hundreds of companies instead of gambling on just one -- the one where you get a paycheck.

Consumer advice courtesy of