ESPP vs 401K - Which is the Better Investment?

  1. KevinTimothy profile image81
    KevinTimothyposted 4 years ago

    ESPP vs 401K - Which is the Better Investment?

    If you could only afford to invest in one, would you choose your employee stock purchasing plan or the 401K? Please support your answers.

  2. Stephanie Henkel profile image95
    Stephanie Henkelposted 4 years ago

    While the ESPP sounds like a great idea when the company is doing well, I think it's dangerous to put all your eggs in one basket. Yes, people at Microsoft and Apple have done extremely well when their stocks soared, but other companies have gone bankrupt and stocks plummeted. This leaves the  people on the verge of retirement flat out of luck.  I personally know of at least two people who lost 50-75& of their retirement savings that were invested in their bankrupt company's  stocks..

    Younger people can afford to take more risks, and might benefit from purchasing their company stock, but those who are looking for somewhat safer investments would be better off with a 401K with investments diversified among stocks and bonds.

    1. CraftytotheCore profile image82
      CraftytotheCoreposted 4 years agoin reply to this

      Agreed!  I've never invested in a ESPP, but having a 401K with proper financial guidance is a great way to start.