How Does Company Stock Fit Into Your Investment Portfolio and Retirement Plan?

How Does Company Stock Fit Into Your Investment Portfolio and Retirement Plan?


Employer-sponsored retirement plans may include company stock options. When evaluating your retirement plan, review your company stock options with your financial advisor to make sure your retirement portfolio aligns with your investment goals.

Before meeting with your financial advisor, use these tips to review your employer-sponsored retirement plan.

Read the Fine Print

Learn the rules of your employer-sponsored plan. Ask your human resources manager for a Summary Plan Description, or SPD, which contains important plan information, including restrictions on when you can sell company stock.

Review the Asset Allocation

Is your employer-sponsored plan well diversified1? What can you do to further diversify the mix? Do you have company stock options? You can consider exercising your stock options so you can sell and reinvest the assets as you wish. A word of caution, though: stock options are complex and diversification does not necessarily guarantee better performance or eliminate the risk of loss. Be sure to discuss potential tax implications with a qualified tax professional.

Consider Additional Retirement Accounts

You can use tax-advantaged2 retirement options such as an IRA to fill any gaps in your employer –sponsored retirement plan. If your employer-sponsored retirement plan does not include a small-cap equity option, you could invest in a small-cap mutual fund of your choice through your IRA. You can contribute $5,500 annually ($11,000 for a married couple filing jointly) to an IRA. Keep in mind tax deductibility is based on income levels and other factors.

Because no two people are the same, the appropriate amount of company stock in an investment portfolio varies from person to person. Contact a Fifth Third Bank financial advisor to help you determine an investment strategy that suits your unique needs.

The information contained herein is for information purposes only, is not designed to address your financial situation or particular needs and does not constitute the rendering of tax or legal advice. You should consult with your tax advisor or attorney for advice pertinent to your personal situation. Asset Allocation, Alternative Investment and Hedging/Diversification strategies are intended to mitigate the overall risk within your portfolio. Some strategies may be subject to a higher degree of market risk than others. An investor should understand the costs, cash flows and risks inherent in a strategy prior to making any investment decision. There are no guarantees that any strategy presented will perform as intended. Fifth Third Private Bank is a division of Fifth Third Bank offering banking, investment and insurance products and services. Fifth Third Bancorp provides access to investments and investment services through various subsidiaries, including Fifth Third Securities. Fifth Third Securities is the trade name used by Fifth Third Securities, Inc., member FINRA/SIPC, a registered broker-dealer and registered investment advisor. Registration does not imply a certain level of skill or training.

Fifth Third Private Bank is here to help: