Monday, January 11, 2010

401k Blues

Sorry that I have been MIA, I have been working 12 hour days and when I get home blogging is the last thing on my mind. Sometimes I really hate being salary, at least when I was hourly I never worked more than 40 hours per week.

Anyway, I have been working toward my goal of paying off my Master Card and I am glad to say I am $170 away from that goal. I also have $450 in my savings.

I have also been reading up on finance, and in the near future I plan to open a Roth IRA. But here is my dilemma.

The good news is - my new company has a 401k. The match up to 1% of my salary 100%. From 2% - 5% they will match $0.50 on the dollar. I will be eligible to join in 11 months.

The bad news is - there are no investment options. They take the money to purchase their own stock. I am told I can sell the stock whenever I want but that is a lot to go through.

The question is, should I sign up for the 401k?

I know free money is great, but only having the stock of one company in my portfolio seems dangerous to me.



  1. I can't give you an answer unless I know the name of the stock. Actually, no one can give you the answer either, without knowing the name of the stock.

  2. The short answer would be no.

    A key to sound investing is diversification. Since your 401k will have only shares of a single company, the volatility will be insane. If I were in your shoes I'd do two things before reconsidering the 401k:
    1. Invest in the Roth. Start with a broad mutual fund or ETF (I like Vanguard Total Stock Market - VTI)
    2. Complain to HR that the 401k is not a very competitive benefit and you and your coworkers would like a better option. Ask around the office and see who else agrees.