Transcripts

"Reviving the Economy: Jobs"-Investing in Your Employer

SUSIE GHARIB: With job security fleeting and a bear market in full force, more Americans are focused on their personal finances than ever before. So tonight's "Money File" combines all of those concerns. As continue our month-long series, "Reviving the Economy: Jobs," we have some tips on investing in your employer. Here's Jason Zweig, personal finance columnist at the "Wall Street Journal."

JASON ZWEIG, PERSONAL FINANCE COLUMNIST, WALL STREET JOURNAL: When you're trying not to put all your financial eggs in one basket, don't forget that one of the eggs is you. Stocks, bonds, mutual funds and cash make up your financial capital, but your career and your salary are what's called your human capital. Those parts of your portfolio are very closely tied to the fate of the industry you work in. Often, the value of your house is, too. If your company falls on hard times, that can hit your salary, job security and home value all at once. To avoid this triple-whammy, don't over-invest in your own firm. Putting even 10 percent of your assets into your own company's stock is double-dosing. You should also avoid sector funds that own other stocks in the same field. Instead, look for investments that could help when your human capital is hurting. If you work in plastics, then a rise in oil prices could crimp your firm's profits. So you might buy a fund that holds oil stocks; that way, if your firm's earnings go down as oil prices go up, at least your mutual fund could do well. If you work for a travel agency, then perhaps you should own an Internet fund, since it may hold the very firms that are taking business away from yours. Every situation is different, of course. The whole point is for you to make sure you never have a basket in which all the eggs break at once. I'm Jason Zweig.