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Sell Your Employer, Get VTI Instead

The last week I've been doing a great deal of research on behavioral finance. There are several potential pitfalls for investors to avoid, but most investors are not familiar with behavior finance. I'll be highlighting several of those pitfalls so readers can watch out for them. My focus in this article is why the Vanguard Total Stock Market ETF (VTI) is a better investment than your employer. I can't say that VTI will provide better returns, but I am confident that the expected return for the level of risk will be superior.

Two problems with owning your employer: Problem #1

The first problem should be fairly clear to most investors. Holding individual companies is a fine way to invest, but it creates a substantial amount of diversifiable risk if individual companies are a large part of the portfolio or if multiple companies within the same industry are being selected.

When… Read More …