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Portfolios 207: Investing in Your Company's Stock

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1.
You might currently own some of your company's stock indirectly via _______.
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Mutual funds. Mutual funds that you own may have your company's stock in them if the stock is publicly traded. These funds could be part of a company retirement plan or you might hold them independently of it.
2.
If their investment goal is less than five years away, how much of their company's stock should most investors own at most?
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10%. If your company's stock hits a bad streak right before you need the money, you may not be able to reach your goal.
3.
As part of the 1997 Taxpayer Relief Act, employers can no longer direct more than _______ of their employees' retirement plan contributions into company stock.
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10%. The Taxpayer Relief Act aimed to limit employers' use of company stock for retirement plans.
4.
It's possible to own shares of your company's stock in places other than your company retirement plan or stock options.
Choose wisely. There is only one correct answer.
True. For example, mutual funds might hold them, or you might have an additional retirement plan that holds them.
5.
If you decide to sell some of your company stock but will owe significant capital gains taxes on the growth of those shares, what might be the least painful thing to do?
Choose wisely. There is only one correct answer.
Sell the shares over a series of years to spread out the tax hit. This is the happy medium for most investors. You're managing your taxes and your risk at the same time.