Hi Money Minder,
I work for an awesome company where they match my 401k contributions with company stock in a Roth IRA. Pretty sweet deal, right? I’m currently putting in double the required amount to get this stock, but I’m wondering if it’s really worth it. Should I just stick to the minimum contribution and use the extra cash to invest elsewhere or pay off my student loans? What do you think?
Thanks for your help,
Savvy Saver
Response from THE MONEY MINDER:
Hello There,
Congratulations on being a part of an employee-owned company, that’s truly a unique and beneficial opportunity! Your approach to maximizing your 401k contributions to receive company stock is commendable and shows your dedication to secure your financial future.
Considering the details you’ve shared, it does seem logical to assess whether contributing double the required amount to the 401k is the most optimized approach for you. Since the company’s match is a fixed amount regardless of your contribution level beyond the minimum, redirecting the surplus money towards other financial goals like investing elsewhere or paying off student loans can be a strategic move.
One practical approach would be to contribute the minimum X amount to the 401k to secure the company match and then redirect the extra funds towards paying off your student loans or investing in other areas. By diversifying your investments and reducing debt, you can create a more balanced financial portfolio that aligns with your short and long-term goals.
Ultimately, it’s important to weigh the benefits of receiving company stock against the advantages of utilizing the extra funds for other financial purposes. Consider consulting with a financial advisor to help you create a comprehensive plan that maximizes your financial resources efficiently. Best of luck, and remember, at THE MONEY MINDER, we’re here to support your financial well-being every step of the way.
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