Problem: Through options and matching, your retirement plan is heavily invested in employer stock.

        Strategy: Diversify it.

        The Financial Planning Association says that loading up on company stock can make you very wealthy, but it also can increase your risk. Your portfolio, as well as your job, is riding on the fortunes of a single company.

        A well-diversified portfolio minimizes the impact of a dramatic decline. Yet employees — particularly executives at startup companies but even rank-and-file at seasoned companies — routinely load up their portfolio with employer stock.

        Diversifying often isn't easy for employees, since companies often will match retirement contributions only with company stock, they pressure employees to invest in the company, or they may restrict the sale of company stock. Here are several strategies for diversifying.

        • Keep the rest of your portfolio in different industries or types of assets. If your employer stock is large cap, consider putting the rest of your money in such assets as small cap, international and bonds.

        • Buying employer stock sold at a discount is probably too good a deal to pass up, but try selling older shares at the same time so you don't increase your overall position.

        • Don't dump the stock all at once, even if you can. Spread out selling to reduce volatility and minimize the tax bite.

        • Some employees have borrowed against their company stock in their 401(k), forcing the sale of shares to fund the loan, then repaying the loan and investing in other assets offered by the plan.

        • Consider more expensive or exotic strategies such as “collars,” which can effectively lock in a price, or tax-free swaps of stock through an exchange fund.

        Readers: Consider Savvy Strategies as general information only and seek the help of professionals because circumstances might vary.

        Planners: Share your unique strategies with Enquirer readers. Send your Savvy Strategies to Amy Higgins, 312 Elm St., Cincinnati 45202 or e-mail ahiggins@enquirer.com.

Mortgage rates dip below 8 percent in Tristate
Covington woos e-startups
Job market 'churning'
Every one an insider
Wozniak here for some Apple talk
Chiquita slides to $2
HIGGINS: Personal finance
Rules being made for sharing financial data
Savvy strategies
Staying at ARM's length
Technology rally extends market rebound
The Sophisticated Investor
Tristate Summary
What's the Buzz?