Episode 121: How Much Should You Invest in One Stock?

Today’s Prep:

If you’ve found a good stock, how much is okay to invest in it? David answers this question from the mailbag, as well as three others related to when to retire and the stability of Social Security.

(Click the featured times below to jump forward in the episode)

Equipping Points:

As a financial advisor, David always enjoys answering questions from listeners like you. Today on the Cover Your Assets KC podcast, David answers four questions related to retirement and investments.

Jerry is 65 and recently had a heart attack. He’s out of work for another week but then hopes to get back to a normal schedule with no plans to retire anytime soon. His wife though is concerned. Isn’t it normal to work past 65? David says he can’t comment on the health side of things, but financially, do you want to keep working? If you were to have another heart attack in the next few months, how long would your money last? Or, if something were to happen, how long would your money last for your wife?

Greg is being offered an early retirement package that includes a severance package and a pension buyout. Is it wise to consider this? This depends a bit on the lifestyle you want in retirement. Will the severance mean that you can actually retire or just enough to bridge you to your next job? How well have you saved for your retirement? Have you factored in for inflation?

Diane is 45 and worried about the stability of Social Security. Will it be around for the rest of her lifetime? David is convinced it will be there, but guesses that changes could be made. The full retirement age might change or more Social Security could be taxable. If you’re currently retired, you’ll most likely have a low impact by whatever changes happen. If you’re under 40 though, you should probably expect more changes by the time you reach retirement.

Andy has about $2 million invested, but almost half of it is invested in one company. How much is acceptable to have invested in one stock. Common advice says to not have more than six percent in one company. Having a significant amount of your net worth invested in one company is not considered diversified. David shares the values of several companies five years later to give an idea of why diversification is important.

Listen to the full episode or use the timestamps below to skip to a question you most want to hear the answer to.

[0:57] Mailbag: Is it normal to work past 65 years old?

[4:11] – Mailbag: Should you consider an early retirement package?

[8:49] – Mailbag: Will Social Security be around the rest of my lifetime?

[11:27] – Mailbag: How much of your portfolio is okay to be invested in one stock?

Today’s Takeaway:

“Diversification increases your probability of success.

– David Dickens

Additional Resources:

PODCAST: Things You Should Never Assume In the Financial World

PODCAST: 4 Steps to Help You Plan Ahead for Taxes in Retirement

PODCAST: 5 Keys to a Strong Financial Foundation


More From David:

The host: David Dickens

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