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Comment by codemac | Hacker News Reader

Remember to set up auto-sale folks.

Your retirement returns will be less than selling at a lifetime high price of whoever you work for.

But you will not sell at the lifetime high price. Please don't forget to sell at all.

It took a lawsuit for my employer (Honeywell) to allow moving (out of Honeywell stock) of matched contributions. I still keep about 20% in company stock. It has done very well and pays a good dividend. To think that we were almost bought by GE years ago.

>I still keep about 20% in company stock. It has done very well and pays a good dividend. To think that we were almost bought by GE years ago.

I'm curious why you keep so much in Honeywell stock? For a very long time GE was a great company to have that would routinely give nice returns and dividends, and then things went downhill. Layoffs happened, and those people were faced with much lower portfolio valuations if they were heavily weighted in the company they work for.

$2.3k/year in reinvested dividends.

$18.5k contribution + $10.5k employee match + $2.3k dividends. The dividends are like an additional 7% bump in contribution.

I've never understood why people care so much about dividends. The stock price drops by the amount of the dividend on the ex-date, so a stock with dividends that are always reinvested is equivalent to a stock that never pays any dividends. (Unless you're holding it in a taxable account, in which case you have to pay taxes on the dividend and actually come out behind).

I like dividend stocks because it is automatically increasing my number of shares in a stock I like, and thereby 'bakes in' the gains. A stock that doesn't have dividends must be sold in order to reap profits, and as a novice investor I never know when to sell.

If you are a rank and file employee, I would suggest divesting entirely from your company's stock. From a risk perspective it's extremely dangerous as you are already dependent on your employer for your source of income. In the case that they do poorly you have the potential to lose both your income and your savings. Unless you have the ability to seriously affect the stock price, you are putting too many eggs into a single basket.

With matched contributions it's a hard choice. You are effectively buying stock at a huge discount, having up to say say 20% of your savings in the company stock is very likely to be a good idea. You just need to be selling it ASAP.

Not sure that's universally a good idea. Rank-and-file may still have inside information that makes holding stock advantageous (obviously adhering to any applicable insider trading rules). If your skillset is highly portable, you can probably consider your income decoupled from your employer. Your equity with your employer could then be considered high-risk moonshot investment.

But I certainly agree that your core nest egg and growth investment be kept totally decoupled.

There's no need to divest entirely, assuming a reasonable portion (say, no more than 3-5%) of total holdings is in company stock. That said, I have heard someone in my company say they refuse to invest in tech stocks at all, because they're concerned about a sector-wide downturn taking out both their job and their investment gains. I think that's a bit of an extreme position, but I understand where it's coming from.

It seems extreme but if you don't have enough other savings to bridge 1-2 years of joblessness I think it's very reasonable. The tech sector might tank and come back but you need enough breath to wait for recovery.

I don't consider 20% as having all the eggs in one basket. I sold it all at $80 years ago, thinking it was too high (it was at $20 when I started in mid 90's). I'd be up several $100k if I had not sold it.

Or, at a minimum, at least don't get too greedy. I got (somewhat) lucky with the dot-com crash. My prior employer's stock (which I had been accumulating over a decade from a previous employer who got purchased) lost about 95% of its value. Fortunately, I had sold some and the stock did end up recovering a bit.

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