A committed saver seeks more balance. By Jeffrey R. Kosnett, Senior Editor April 30, 2006 If extreme retirement saving were an Olympic sport, Bob Przybylski would be a medal contender. Bob, who is 44 and single, invests $16,000 a year, about one-third of what he earns as a producer for a public-TV station in central Michigan. Bob, who lives in Bay City, owns his house free and clear, so he can put away more of his income than most people.But although Bob would win the gold for financial discipline, he wouldn't make it to the medal stand for his diversification efforts. Nearly half of his $120,000 stash is in three places: General Electric (symbol GE), Intel (INTC) and Templeton World fund (TEMWX). Two blue chips. Bob's approach to stocks is unusual. He accumulates 1,000 shares in a few blue chips and holds them forever. Intel, his first pick, has been a letdown. He lost $4,000 on $26,000 worth of purchases made between 1997 and 2002. Bob then began buying GE. His 515 shares, worth about $17,000, have gained 10%, and Bob intends to invest $500 a month directly with GE until he hits 1,000 shares. He claims no special knowledge of GE's myriad businesses nor of Intel and the semiconductor industry. He simply reasons that these are world-class firms with staying power. "I want to give them 20 years and see what happens," he says. Including Templeton World, Bob owns seven funds, mostly in 403(b) retirement plans and a Roth IRA. His funds are good, but here, too, diversification is an issue. All of them focus on large companies. He owns no small- or midsize-company funds and has no bond funds. What's more, GE and Intel are among the ten biggest holdings in three of Bob's funds, and that leaves him even more in thrall to just two stocks. Advertisement Of the two, well-diversified GE is the keeper. "If you're going to pick one stock, I'd say GE, because it's like a mutual fund," says Andy Claybrook, of Fee-Only Solutions, in Franklin, Tenn. Analysts laud GE's gradual exit from insurance and cite strong results in its global jet-engine, power-generation and industrial businesses. Intel executives, by contrast, regularly bemoan weak chip pricing. The stock's price-earnings ratio is lower than it used to be, but that's because Intel's growth has slowed. Simple solution. Bob's Intel experience doesn't have to go for naught. He owns the shares in a taxable account, so he should sell, use the losses to offset capital gains, then claim any excess loss to offset up to $3,000 in ordinary income earned this year (any leftover losses may be used in future years). Bill Neubauer, of Comprehensive Money Management, in Coral Gables, Fla., recommends that Bob use the proceeds of the sale to diversify. He suggests Bob buy index funds or exchange-traded funds, such as Vanguard Energy Vipers (VDE) and iShares Cohen & Steers Realty Majors (ICF). Bob should also work in some good small- and midsize-company stock funds -- funds with holdings that won't overlap his others (see The 25 Best Mutual Funds). A few simple moves such as these and Bob should be more confident that his avid savings habits will lead to a golden retirement.