If you invest a large chunk of your 401(k) in the stock of just one company, your actions are fraught with peril. If that stock performs badly â€” which is always possible â€” then you could end up with a significantly diminished standard of living in retirement. But at least thereâ€™s a possible upside: if the stock does spectacularly well, you can end up in clover.
By contrast, thereâ€™s no reason whatsoever to invest a large chunk of your 401(k) in the bonds of just one company. You still have the same downside â€” the company can default on its debt â€” but thereâ€™s no upside at all: the best-case scenario is just that you muddle through getting your coupon payments until the bonds mature.