Many of us have seen our 401K portfolio plunge during 2008. But I am still continuing to contribute 10% of my salary to my 401K, and I thought I will share with you why. I have at least 30 years till retirement, so I assumed this recession will be long over by the time I retire. And if not, then I will have bigger problems to worry about than just my 401K. The reason I continue to contribute is because the recession has essentially put all the stocks on sale. This means, every dollar I spend on the stock market has the ability to buy more shares. Thus, when we do finally get out of the recession, I will have a lot of shares that will be gaining value.
Employee Stock Purchase Plans, on the other hand do not feel like that great of an option anymore. My employer’s stock went down to almost half its value in the last year. And though I can think of this particular stock being on sale as well, I do not feel comfortable betting that this one stock will go up as much as the rest of the market. So in January, I reduced my ESPP contribution from 15% to 1%.
If you have an ESPP system at your place of employment, what have you done with it? Let me know.
