f. New investment strategy: How will you handle new investments? You need to decide the maximum percentage you will allocate to any new investment. Most experts advise that this amount should not generally be more than 10 percent of an investor’s assets. Too often, people lose a great deal of money by putting all of their investments into one company or product that they think is a “sure thing.” There are no sure things. To avoid falling into this trap, decide now on the maximum amount you are willing to invest with a single investment: in other words, decide how much you would be willing to lose with a single investment.

You should also decide on the maximum amount of your company’s stock that you will include in your 401(k) or other retirement account. For most people, this amount should not be more than 5 to 10 percent of the funds in their retirement account. Remember the principle of diversification. If your company does well, your job is secure and your retirement portfolio is strong. If your company does poorly, you may loose your job and your retirement portfolio may be reduced substantially as well.