Those two examples of company ownership are great examples of why I, personally, think that is an awful idea. That is the exact and most extreme example of the opposite of diversification of risk.

I already am very much reliant on the company I work for a job and their success drives that. Having my long-term savings also at the same risk is just too much. Some lagniappe shares sure, but not the core of an individuals financial savings.


Link below is to more details behind the Circuit City "story". This is actually how the PBGC plus a companies bond on retirement plan is supposed to work. This is also an example of how they may not be fully funded, but that is different than the dramatic fear of taking the pension money and running!

Circuit City story

Yeah, 80% of America is this way. You can't fix stupid choices and people don't change.

I worked for a bank that failed last spring. I had sold a bunch of company stock prior to moving across country so my loss was under 10k. I have friends who lost well into 6 digits, had been doing ESPP every paycheck for years add a little RSU. Stock collapsed so fast and hard and we kept being told we were ok. Right until we weren’t.

Now a year later the contract the new company gave most everyone has run out and I’m laid off. I was laid off 23 years ago in the dot.com crash and had been under investing in stocks and saving in cash. Thankfully I have about 5 years living expense in cash. And a healthy amount in 401k but need to probably 2x it in next 15 year to retire acceptably.

My brother 53. Was laid off most of all last year. He had always maxed out 401k and never saved cash. He had to raid his 401k and now he’s hating life as he got an even better paying job and was murdered in taxes.

My Only debt is mortgage and I have tried to live all my adult life beneath my means. There will be a lot of folks in for hard times in next few decades.

quote:

Originally posted by Georgeair:

quote:

Originally posted by old rugged cross:
Worked 35 years for a competitor. Right before he was ready to retire the company pulled the plug. Poof, his hard earned retirement saving was gone. Of course the owners and families were set. Ken, not so much. . I knew what had happened. But he never said a word.

This is the kind of general anecdote that really doesn't make sense other than for drama.

Either he was in a pension plan which they would have been obligated to fund to at least a minimal level, or he had assets in a 401(k) retirement plan. Either way, if those just "poofed" the owners would be in deep trouble.

Now if had a substantial investment in the company stock, that's a different matter. And idiotic.

May not make sense to you but years ago companies had what they called profit sharing plans. The owner put money into a fund annually at his discretion. The longer you were with the company, the more you got. No employee contribution. The owner invested it at his own discretion. Little regulation at that time. Owner
pulled assets out of the company and let it go bankrupt. Employee's, like Ken. Lost their entire retirement. That is how it happened. Whether you understand it or not.

quote:

Originally posted by old rugged cross:



May not make sense to you but years ago companies had what they called profit sharing plans.

I was in one of those profit sharing plans for about six years. When I left I got a check for about a
hundred dollars. They were buying Lear jets and condos in the Bahamas. Pretty good deal.

quote:

Originally posted by ElToro:
I worked for a bank that failed last spring. I had sold a bunch of company stock prior to moving across country so my loss was under 10k. I have friends who lost well into 6 digits, had been doing ESPP every paycheck for years add a little RSU. Stock collapsed so fast and hard and we kept being told we were ok. Right until we weren’t.

Back in the early 1980's my first real job was with IBM. The "old guys" had been diligently maxing out the employee stock purchase plan. It was a very generous plan. Many used it for college funds for their kids and/or retirement.

Then the price tanked, losing something like 50%. Suddenly they couldn't pay tuition or retire when they'd planned, or they had to spend the depreciated assets.

After a few years the price rebounded, but those individuals certainly suffered.

Diversification was the lesson there. I always sold my employee stock immediately after taking full advantage of the discount.

I was a loan shark while in the Navy at $20 for $30 terms payable on payday 15th or 30th. More recently, I’ve been giving financial studies to groups and financial advice one on one. In either situation, I’ve met people who are careless with money.