Personal finance tips: How to invest in your company's shares, and more

Three top pieces of financial advice, from knowing when to buy or lease to understanding overdraft protection

(Image credit: (James Nielsen/Getty Images))

Investing in your company's shares

Don't put all your eggs in your employer's basket, said Jason Zweig at The Wall Street Journal. Before you buy stock in your own company, "set your emotions aside" and carefully assess the risks. While you're at it, look at the "tragic tales" of ex-employees of failed firms like Enron, Bear Stearns, and Lehman Brothers, "who had nearly all their retirement assets riding on those firms' own shares." While subsequent laws have made linking retirement plans to your employer's stock harder, the problem "hasn't disappeared" completely. A smart investor should remember to diversify away from company stock. Yes, you might miss out on a spectacular gain, but you also "limit the risk of being wiped out" if the company goes belly up.

Knowing when to buy or lease

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If you're shopping for new wheels, think carefully "before choosing a loan or a lease," said Christina DiGangi at First, when it comes to monthly payments, a lease is likely to be cheaper, but if you exceed your lease's mileage limit, that can result in fees that will effectively erase any savings. A lease can also include covered maintenance that purchases do not, but it might require a big deposit, while loans can often finance the full cost of the car. Finally, consider your usage. Leasing offers some tax advantages if you use the car for business, but buying makes more sense for a "frequent road-tripper," whose long-haul trips could put many miles on the car.

Understanding overdraft protection

If you're still confused about overdraft rules, you're not alone, said Scott Gamm at Main St. While the Credit CARD Act of 2009 required banks to stop automatically enrolling consumers in overdraft protection, many customers are still getting hit with overdraft fees. That's because "when opening up a bank account, you'll be swamped with papers to sign," including the overdraft protection form. But that form isn't worded very clearly, and the best course of action is to avoid completing it altogether. If you do sign up for overdraft protection, beware of how your institution orders transactions. If they're processed chronologically, you should only be charged once a check or purchase exceeds your balance, but if your bank prioritizes transactions by size, you could be hit with a fee for smaller transactions even if they were executed prior to the overdraft.

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