401(k), 403(b), 457(b) etc have become a very widely used saving and investment vehicles for most of Americans with its tax-qualified and company matching features.  In these plans, there are wide selection of mutual funds, ETFs, and company stocks to choose.

I would suggest to choose index mutual funds since the risk is lower than the sector specific mutual funds and a lot lower than any individual stocks.  If you want to own some of your own company's stock, the rule of thumb is not to exceed 4% of your total investment portfolio.

The downside of owning a large chunk of your company's stock in your portfolio is that it is one direction investment which is all depened on how your company is doing.  If your company is doing well, your employment is secure, your salary is going up, you get more bonus, and your company stock is doing well.  The opposite of this is that everything is going south in the same direction.  For managing your risk, you should own no more than 4% of your company stock in your portfolio!

There was a story about a 60-year-old custodian who worked for Enron Co. for many years.  Enron at one point was the 7th largest company in US during the 90's.  This gentleman had a 401(k) worth north of $2M which was all in Enron stock, of which he was not allowed to sell them.  Enron went bankrupt in October 2001 which also caused the dissolution of Arthur Andersen, one of five largest accounting firms.  The Enron bankruptcy wiped out this genleman's 401(k).  For a 60-year-old person, it is very, very hard for him to recover from that kind of loss. 

Since then, most companies' 401(k) plans allow the selling of the company stocks which were prohibited during the 90's in most of companies' 401(k).  The good thing about the 401(k) plans is that most of them don't have any individual stocks anymore.  This will prevent the participants betting on a single company stock.