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Enter the characters you see below Sorry, we just need to make sure you’re not a robot. Your browser will redirect to your requested content shortly. Access to this page has been denied because we believe you are using automation tools to browse the website. Access to this page has been denied because we believe you are using automation tools to browse the website. Menu IconA vertical stack of three evenly spaced horizontal how To Invest 20k In A Business. Buying stock in your company seems like a logical investment at face value. What better way is there to show the higher-ups not only your loyalty but also your willingness to take a bet on them?

The problem is that you’re only making yourself more financially vulnerable in the process. 16 to 19 percent share of their portfolio to the cause, according to a 2012 report by the Employee Benefit and Research Institute. Most experts recommend investing about half that much, if any, into employer stock. If you work for a company, you are basically already an investor there. You are taking a risk on the fact that they’ll succeed and you’ll be gainfully employed for the long haul. If they go under, you will lose your income and, in some cases, your benefits, too. If you’ve got 20 percent of your retirement savings also tied up in the machine, then that’s putting even more of your finances at stake.

Moshe Milevksy, a finance professor at York University in Toronto, has long advised individual investors against this path. That way, the intersection between your career and your investment portfolio is avoided,” he said. The bottom line: Investing a portion of your portfolio with your employer isn’t a surefire trip to the poorhouse, but be careful how big a slice of your pie you’re willing to give up. Menu IconA vertical stack of three evenly spaced horizontal lines. After all, there are several compelling reasons to invest in stocks, financial journalist Andrew Tobias explains in the updated version of his 1978 investing classic, “The Only Investment Guide You’ll Ever Need. That being said, investing is always a risk. Little, if anything, is guaranteed when it comes to investing.

You could earn money or lose it, so if you’ll need quick access to liquid cash in the short term, you probably won’t want to invest. Only invest money you won’t have to touch for many years,” Tobias emphasizes. If you don’t have money like that, don’t buy stocks. People who buy stocks when they get bonuses and sell them when the roof starts to leak are entrusting their investment decisions to their roofs. People have a tendency to “shun the market when it’s getting drubbed and venture back only after it has recovered,” Tobias explains.

In short: Don’t get overly excited when the market is judged to be healthy, and remember that bad things aren’t obvious when times are good. As legendary investor Warren Buffett likes to say, “You only find out who is swimming naked when the tide goes out. Rather than rushing to buy hundreds of shares when you’re convinced the stock is going to take off, invest a portion of your paycheck in the market each month, Tobias recommends. Diversify over time by not investing all at once,” he says. Spread your investments out to smooth the peaks and valleys of the market.

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750 a month or whatever you can comfortably afford — is the ticket to financial security. By and large, for your long-term money, ‘buy and hold’ is the way to go,'” Tobias emphasizes. As Warren Buffett says, “If you aren’t willing to own a stock for ten years, don’t even think about owning it for ten minutes. Forever is a good holding period.

After all, Buffett has held his stock in GEICO since the 1950s, Tobias notes. Putting all of your money in one place is asking for trouble. If all your money is riding on two or three stocks, you are exposed to far more risk than if you’ve diversified over 20 or 30,” Tobias writes. Think about it: 20 or 30 companies simultaneously failing is pretty unlikely. Or you could be content to buy very broad index funds that, while they’ll perform only ‘average,’ will almost surely include these great stocks in their average.

Oftentimes, our choices are clouded by fear, greed, and nervousness — and it doesn’t help that you can see how you’re doing throughout the day. Avoid the temptation to check a stock ticker or your account on a daily or weekly basis. Markets go up and down every day, and so do individual stocks, “but that doesn’t mean there is significance to every move,” Tobias warns. Plus, the more you trade, the more you underperform, Buffett says: “For investors as a whole, returns decrease as motion increases. Beware high-fliers and the stocks that ‘everyone’ likes, even though they may be the stocks of outstanding companies,” Tobias warns. Even if the growth comes in on schedule, the stocks may not go up.