Wondering How Much DTE Energy Stock You Should Own?

Wondering How Much DTE Energy Stock You Should Own?

February 22, 2024

A portfolio over-concentrated in one stock might be an issue for any investor. For a DTE Energy employee, owning too much DTE Energy stock could be doubly problematic.

Of course, that raises several questions. For instance, exactly what is too much or too little? Just how much DTE Energy stock should you own?

Investing heavily in a single stock can work well when the stock is soaring, but a drop in the market could deliver a major hit to your portfolio. Overconcentration is a key investment risk, especially for workers like DTE Energy employees who can buy DTE Energy stock within their 401(k) plan.

Buying a stock you’re familiar with can be a solid investment strategy, and as one of the many workers helping the company operate, you may rightly feel optimistic about DTE Energy’s future. 

However, if the company runs into unforeseen trouble and its stock plummets, your investments could suffer. If it happens during a period of financial trouble, you could even find wages and bonuses reduced, or worse yet, you could find yourself out of a job.

Owning Only DTE Energy Stock Comes With Risks

Having the option to buy DTE Energy stock through the 401(k) is an easy way to begin investing. However, it’s important not to stop there. Owning stock in only one company exposes you to several risks, such as:

  • Company-specific risk: A change in management or an environmental disaster
  • Market risk: The tendency of a single stock’s value to swing more than several in a portfolio
  • Opportunity costs: Missing the chance to invest in other assets
  • Liquidity risk: Difficulty converting the stock into cash to cover a short-term need

When you hold a portfolio with only one stock or invest disproportionately in a single stock, you open yourself to many risks beyond the ones mentioned that could upend your financial goals with a single adverse event.

As a DTE Energy employee, you should take advantage of other 401(k) investment options to diversify your portfolio.

Buy Other Assets Beyond DTE Energy Stock

Diversification is the key to removing some of the risk from overconcentration in one investment asset.

There’s no magic number when it comes to how much DTE Energy stock is best to own. Many financial advisors say it’s best not to hold more than 5%–10% of a single asset. However, the real answer to the question of how much of a given stock to hold is that it depends on your circumstances, goals, and investment strategy.

You know DTE Energy, and you play an important role in its success. That said, there are numerous factors you can’t control: the company’s future performance, electric industry changes, world events impacting the energy sector, and economic downturns (among others).

Consulting a financial advisory firm like CWM Financial can help you diversify your investment strategy, reducing your overall level of risk and exposing you to other companies, industries, and sectors. You also might consider allocating your money beyond equities (stocks) to other asset classes, such as:

  • Fixed income (e.g., bonds)
  • Real estate
  • Commodities (e.g., gold)
  • Cash and cash equivalents
  • Currencies

While all investments come with some risk, spreading your risk across several different company stocks, industries, or asset classes can make the road to your financial goals that much smoother.

*Diversification does not assure a profit or protect against loss in a declining market and does not guarantee any objective or goal will be achieved.

Get Your Questions Answered

If you’re a DTE Energy employee wondering how much DTE Energy stock is right for you, we invite you to speak with a wealth manager at CWM Financial. Our advisors are knowledgeable about your company and benefits and can help guide you to an answer that aligns with your values and financial goals.

Call (248) 220-4321 or email robert@cwmfinancial.net. You can also schedule a meeting by visiting www.calendly.com/cwmrob/initial.

About Rob

Robert Moore is senior partner, financial planner, investment advisor, and co-owner of CWM Financial, an independent, fee-based wealth management company based in Troy, MI. With over 20 years of experience, Rob provides customized advice and solutions that are in the clients’ best interest. He strives to always go above and beyond his clients’ expectations, helping them retire with more security than they had before, and invest their time and energy in what’s most important to them. Rob specializes in working with DTE Energy employees, helping them maximize their benefits so they can reduce taxes, prepare for retirement, and protect their families through a comprehensive planning process. Rob graduated from Michigan State University and holds the CERTIFIED FINANCIAL PLANNER™ and Chartered Financial Consultant® (ChFC®) certifications.

Rob is known as a diehard family man who enjoys spending time with his beautiful wife, Jill, his daughter, Brookelyn, and his son, Brayden. When he’s not working, you can find him playing basketball once a week, squeezing in a round of golf, and watching college football and basketball with friends and family. He is passionate about enriching the lives of others through his church involvement and service at a community addiction program. Learn more about Rob by connecting with him on LinkedIn.