My Dumbest Investment

My dumbest investment was to succumb to management pressures to not exercise my stock options and sell stock when my employer's stock was at a peak. Although I came out all right in the end, my net worth would have been higher had I exercised them and diversified at an earlier age. Moral: Don't let your company's stock be a dominant part of your portfolio.

— K., online

The Fool Responds: This is a big danger. For many workers who receive stock options or stock grants, company stock ends up being by far the biggest chunk of their portfolio. That's risky, as former Enron employees can tell you. Even bluechip employers can let you down — look at General Electric stock, down more than 50 percent over the past decade, and General Motors, which filed for bankruptcy protection. It's smart to invest in healthy and promising companies that you know well, such as your employer, but don't overdo it. Spread your fiscal eggs over a bunch of baskets. Don't invest too conservatively, either. If you're far from retirement, favor stocks over bonds.

Do you have an emb arrassing lesson learned the hard way? Boil it down to 100 words (or less) and send it t o The Motley Fool c/o M y Dumbest In vestment. Got one that worked? Submit to My Smartest Investment. If we print yours, you'll win a Fool's cap!