Rob West

Holding Too Much Company Stock

December 18, 2020
00:00 0

A single Bible verse may contain the most valuable piece of investing advice ever given. Ecclesiastes 11:2 says, “Give a portion to seven, or even to eight, for you know not what disaster may happen on earth.”  That’s the principle of diversification and we feel you should always invest that way.  But is there an exception to the rule? Rob West and Steve Moore talk about it.


And no, there is no except even though a lot of people think there is.  So what stock could have that much hold over people?  It’s their employer’s stock. Companies make it really easy for their workers to buy it. Plus, it probably feels good to invest where you work.


Unfortunately, 20 years ago, accounting scandals at WorldCom and Enron resulted in the collapse of their stock. Their employees lost billions in retirement savings.


It happened again in 2008 at Lehman Brothers and again in 2015 at Radio Shack. Fortunatley, those horror stories have gotten people’s attention.


Today, Vanguard reports that only 10% of all investors in their defined contribution plans own any company stock at all. The bad news is that half of those, or about 5% of Vanguard’s investors, still have more than 20% of their portfolios in company stocks. That’s exposing them to too much risk if something happens to their company.


It’s not a problem to invest where you work, but it’s the amount of ownership that’s the problem. Consider this: you’re already heavily invested in your company — even if you don’t own a single share of its stock.  If something happens to the company, your paycheck and benefits could be lost. Do you really want to put a big piece of your retirement savings at risk as well?


Many people feel it must be safe to invest in company stock because they see the top executives doing it. Remember, though, those execs could also be investing much more outside the company — so they could absorb a hit on company stock values more easily.  Secondly, research shows that top executives routinely unload their stock incentives over time. In fact, they tend to sell company stock at twice the rate they buy it. 


So the bottom line is — there’s never an exception to the diversification rule — just like there’s never an exception to the wisdom of God’s Word.


Next, Rob and Steve answer listener questions at 800-525-7000 or by email at including the following: 


·      Earlier this year at the start of the COVID-19 crisis, a caller moved a third of his investments over to bonds under the recommendation of a financial advisor.  However, they’ve lost value and don’t seem to be coming back.  Did he make a mistake?  Should he re-allocate?


·      Self-employed husband has had no work this year due to a work-related accident and, therefore, has had very little income.  They’re wondering if they should take distribution from one of their investment accounts and, perhaps, in the process, reinvest those withdrawals into a Roth IRA.


·      Caller put some money into a Roth IRA through his insurance company.  He’s wondering if the company Black Rock is any good.  (Rob doesn’t endorse any particular financial companies, but was able to give the caller some basic information about the company, then help him decide if it might be a good fit for his investments.  Rob also mentioned the webiste to help the caller screen his investments to see how company profits are being used.)


·      Caller is considering transfering some money in an IRA to an annuity and wants to know why Rob is not a fan or annuities.  (The short answer is that Rob does not usually recommend annuities because they tend to be both complex and expensive and he feels your money can do better elsewhere.  He also says it’s not a one-size-fits-all answer.)



MoneyWise is listener supported and we need your help to keep God’s financial principles on the air. Between now and December 31, 2020, a generous donor has committed to matching any contribution you make to the program. So please prayerfully consider making a gift today. Just click the donate button at You’ll feel twice as glad you did.  And for your gift of $25 or more during December 2020, we’re pleased to send you a free copy of Andy Stanley’s book, Better Decisions, Fewer Regrets.  


Thanks for your prayerful and financial support, and thanks for listening!

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About MoneyWise

MoneyWise is a daily radio ministry of MoneyWise Media. Hosted by Rob West, the program offers a practical, biblical and good-natured approach to managing your time, talents and resources.

About Rob West

Rob West is the host of the nationally syndicated radio programs MoneyWise and The MoneyWise Minute heard on more than 900 radio outlets each day. Rob also serves as the President of Kingdom Advisors, an international community of financial professionals who are specialists in delivering biblically wise financial advice. Rob serves as primary spokesperson for the organization and gives leadership to organizational strategy.

A radio veteran, Rob previously co-hosted a live, call-in, financial radio program with his father from 1998 through 2008 at WAFG, Fort Lauderdale, FL. Rob has dedicated his professional career to working at the intersection of faith and finance having led a successful faith-based financial services firm, serving as the host of several radio programs on a biblical approach to finance, and speaking frequently on the topic. Rob and his wife, Julie, live in Marietta, GA with their four children.


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