Diversify your retirement investments

On Mondays, we answer a question from a reader on the blog. If you have a question for us, post it in the comments section or e-mail us.

QUESTION: I work at a company that is not doing well. Our stock is suffering. Most of my retirement is in company stock. What do I do with it? Should I sell now and do something else? I’m 52 years old. Thanks.

ANSWER FROM DAN DANFORD: This is one of the most frustrating issues I encounter. It seems that everyone understands the value of diversification except with company stock in their retirement plans. I've been working with retirement plans for almost 30 years and this is a recurring problem over and over again. In fact, my first job was with a bank trust department, and that bank failed. Many of my colleagues at the time lost most of their retirement savings because they owned bank stock - exclusively - in their accounts.

Sadly, the time to fix this is two years ago. Who knows what the next two years hold for your company? I pray that our economy has seen the worst from this horrific cycle, but even that's a hopeful guess. Every industry faces certain perils, and how yours will fare in the future is anybody's guess. Whether to hold or sell it too hard to call for me, and I don't carry emotional baggage from working there.

Certainly, put new retirement contributions into other things. I'd suggest an S&P 500index fund and/or a good international stock fund. Put diversification to work for you now, and remember this lesson for the last decades of your work life. And - urgently important - share the lesson you learned with colleagues, family, and friends. Especially your family. Teach your children to diversify so they won't face the same crisis when they are 52. Good luck.