Invest Too Much in Company Stock

On top of generous 401(k) matching contributions, companies could lure new employees in by offering their own stock as an investment option for their 401(k) plan.

Experts say that it’s wise to only have no more than 10% of your 401(k) balance invested in your employer’s stock, though there’s also the option of excluding this option altogether. Even that percentage should be lower if you have other portions of your net worth tied up in company stock as the aim is to diversify your portfolio.

That way, if your company performs poorly your savings won’t suffer too much as opposed to suffering greatly if you also have deferred compensation or stock options on top of the company’s stock as an investment option for your 401(k) plan.