Gluttons for Punishment Kiplinger's Personal Finance (07/02) Vol. 56, No. 7 p.22; Smalhout, James H.
According to Boston Research Group, about 30 percent of 401(k) assets are in employer stock, and about 50 percent of those interviewed consider that stock riskier than money market funds. However, many retain their current investments even though financial advisors and the Enron debacle suggest a better course. Many financial advisors contend that 5 percent to 10 percent of a portfolio should be company stock. According to Lisa Meulbroek of the Harvard Business School, holding an individual stock is four to five times riskier than owning Standard & Poor's 500-stock index. Moreover, in order to compensate for increased risks, company stock would have to be purchased 40 percent to 50 percent below its market price.