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Investing 1--CMS Energy Drops Company Stock from 401k Plan

Updated on March 1, 2007

Don't Load Your 401k Plan Up With Company Stock!

CMS Energy announced this week that it was dropping the company stock option from its 401k plan. Previously, the company's matching contribution went into company stock and employees could elect to put some or all of their contributions into CMS common stock.

A company spokesman said "This change was made primarily to reduce the company's exposure to lawsuits in connection to the employee savings plan."

COMMENT: This was a wise move from the standpoint of the company and employees. It's unwise for employees to invest their retirement savings in stock of their employer. As in case of ENRON, employee retirement nest eggs and their jobs can be wiped out in one fell swoop or foul sweep if their employer runs into trouble. It's a mistake to have your job and your savings tied to the fortunes of one company. No load, low cost mutual funds like those offered by Vanguard are a better choice for most people.

Here's a link to the story in this morning's Detroit Free Press 3-1-07.


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