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Invest In Your Company

It’s generally recommended that you don’t invest in your own company because you don’t want to put all of your eggs in one basket. You already have your livelihood pinned on the success of your company, why would you want to put part or all of your investment dollars in with the same company when there are so many others to choose from?

You Understand Your Company Better
When you decide to invest in a company, you probably want to do a fair amount of research into how they do business, how they earn money, potential risks, etc. I can guarantee, unless you’re a hot shot investor with inside connections or the ear of the CEO, you can’t possibly understand a company better than you understand your own company. You know that the Human Resources department was in shambled a few years ago and now the company has a dearth of talent in the 30-40 age range, which may result in potential problems down the road when that age range is looked to ascend into upper management. Or perhaps you recognize that they just ramped up their recruitment from top schools and are positioning themselves to be powerhouses in their industry in five to ten years. That’s insider information that isn’t illegal and could yield long term benefits.

It’s A Good Basket
If you bought 100 shares of Wal-Mart at $16.50 each when it debuted in 1970, you’d have 204,800 shares worth more than $10M. If that wasn’t enough for you, you’d be getting $122,880 per year in dividend checks. Incidentally, $1,650 in 1970 is worth approximately $8,607.90 today (to give you a real comparison). So, if it’s a good basket, why not put all of your money into it?

Employee Discount
Some companies offer an employee stock purchase program in which employees can get a discount on purchases of company stock, this adds a little safety buffer for investors because you’re getting stock at a discount to the street price. Now, there are usually rules as to how long you have to hold the shares but that’s just so you can’t turn around and drop the shares and make a quick profit.

No Faith In Your Employer? Leave.
If you don’t want to invest in your company because you don’t trust the company is growing or getting better at what it does, why are you working there? If it’s because you don’t have any other choice, you probably need to at least try to find a new employer – one that you believe in!

So there you go, three reasons why you should invest in your company… that being said, I don’t own shares of any company I’ve ever worked for (my current employer is privately held) because I subscribe to the idea that you shouldn’t put everything in one basket no matter how good you think it is. (hat tip to Ben [3] for the idea)