Recently, I come across portfolio of one of my close relative. It took me by surprise. The portfolio composition was like this :
95% of her portfolio was made up of investment in the company she was working with. Out of it 60% of the shares she accumulated in last 10 years by way of ESOPS. Looking at the bright prospect and growth of the company she bought balance from the market.
Hardly, she is having any wealth apart from the shares of her own employer.
Now, think of a situation if something goes wrong with the company may be due to political, environmental, global, sectoral or corporate governance issues(We have lot of such examples e.g Kingfisher, JP associates, Satyam computers, Amtek Autu, DLF etc..). Her future will go for a toss. She would be hit by a two edged sword at one end she might loose job due to crisis in the company and at the other end share prices will loose all the gains.
She was very confident and secured for her financial future, but now she realises she is taking a big risk with her and family members future.
Basic principle of investing is that "Don't put all your eggs in one basket" But it is some thing like putting all eggs in one basket and then taking it bull run festival of spain.
So please do take care and diversify your investment across good companies and across sector according to your need.
Do consult your financial planner, it really helps.
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