ESOP:
Employee Stock Ownership Plan

What is an ESOP? It's an Employee Stock Ownership Plan... a retirement savings plan from your company.

This is usually a Defined Contribution retirement plan that allows company employees to purchase the Employer's stock as an investment.

BEWARE! I'm not saying this is a bad option, it's not, but don't get too tied to your company, your loyalty may lead you astray.

Remember ENRON? Those employees lost their life savings when the company went under due to the total mis-management of the company.

Same with General Motors (GM) and my father. He is in his early 80s now, despite his financial planner asking him to diversify a bit more and sell some GM stock (for years now), dad was soooo darn loyal to GM. He just couldn't do it...

In 2009, it happened... GM stock holders lost out, totally, when the Federal Government took control. I never knew you could lose it all. Silly me! I assumed that once they were back on their feet, you'd still own X amount of stocks, but that wasn't the case at all! What a huge shocker!

Luckily, my folks are fine... they had other assets and investments, but they lots LOADS of GM Stock worth a lot of money! Simply because Dad was totally loyal to General Motors!

Buy ESOPs if you like, help keep your company strong -- just Please keep your EMOTIONS out of the investment arena!


Return to more Retirement Money Pages