3 Tips for Assessing Employee Stock and Options

Investing heavily in your employer doesn’t always make financial sense.

Man with a pen assessing charts on a financial report
By + More

[See: 10 Target Date Funds Producing High-Grade Nest Eggs.]

Also talk with suppliers, vendors, customer service representatives and accounts receivable staff in your normal course of work. If you start to hear about canceled orders, cash-flow problems and other evidence that sales might be skidding, you will have insight that might guide your timing for a sale.

3. Most importantly, don't overestimate the blind spots you have precisely because you are an employee. In investing workshops Tanner runs, entrepreneurs often tell her they are sure they will be able to tell if their company is in trouble. "No, you won't," she responds. Chances are, a stock-pummeling development will come from the outside, far from your control. If you are high enough in the company to see a big problem erupting, you are probably constrained anyway by insider trading regulations.

"Figure out your goals for the money," Tanner says. "If you can, sell and diversify. If you have to hold onto it, diversify around it. Just diversify."