Personal Finance
I'm 27 working for Apple with 75% net worth in Apple stock. The rest of my cash is in my 401k and index funds, is that okay?
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24/7 Wall St. Key Takeaways:
In a recent, thought-provoking Reddit post I came across, a 27-year-old Apple (NASDAQ: AAPL) engineer shares their financial situation and investment strategy. With 70-75% of their $550,000 net worth tied up in Apple stock through ESPP (Employee Stock Purchase Plan) and RSU (Restricted Stock Unit) programs, the engineer is grappling with a classic investment dilemma.
While they are optimistic about Apple’s future, the risk of over-concentration is real. Should they hold onto Apple stock or diversify?
That’s exactly what I’ll break down below:
While I generally don’t recommend over-investing in any stock, there are some benefits of investing heavily in Apple:
All that said, the risks of concentrating on Apple stock are very large:
I recommend diversifying away from Apple stock. Putting so much of your financial wellness on one company just isn’t a good idea! Here’s how this engineer could start diversifying:
The poster’s faith in Apple’s future is potentially warranted and understandable, especially since he is an employee. However, I still highly recommend diversifying! He doesn’t have to abandon his belief in the company, but he should protect himself from unforeseen risks. In fact, we recommend re-diversifying every year to improve investment outcomes.
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