To avoid losing money, the employee has to wait until the stock climbs back up and beyond the break-even price. If it does. It's also possible for companies to set a new, lower price for old options, Sanabria said, but they often don't do that. Financial planners see diversifying as the best way to manage the risk that any one kind of investment will take a hit. One rule of thumb says employees shouldn't have more than 10 percent of their portfolio in their company's stock, but this rule will vary with age and other factors.
Younger employees can take more risk.
But if you have only one or two kinds of assets and have a rocky year, it's harder to recover, Thompson said. Sometimes people have to delay retirement or cut back their living standards after enduring that kind of financial insult. There's another big reason financial planners warn against holding too many options in the same company that employs you. Bad times can hit you doubly hard. If you lose your job in a downsizing, you lose your paycheck.