I’m not the biggest fan of Suze Orman. I’ve seen her show and I don’t like the way she talks to her callers, even if they deserve a little berating. I don’t agree with all of her advice, such her suggestions for young workers in the advertising industry in New York. If I remember correctly, her advice was to run up credit card debt on groceries while pursuing the next step on the corporate ladder. Anyhow, there are some thoughts of hers I can support. Suze’s offering Ten Tips for a Prosperous 2006 — and Beyond on Yahoo Finance. Here are her tips:
Play The Match Game.
More than 20 percent of 401(k) plan participants don’t invest enough to get the maximum company matching contribution. That means about one out of every five plan participants is unwisely turning down a bonus.
When I first started at my current company, I debated whether I should contribute 4% of my income in order to get the full employer match on the 401(k). I thought that since I probably wouldn’t be there after three years, the vesting period, it wouldn’t be worth tying up the money I needed as cash. As it turned out, it’s almost four years later and I’m stil here (though I did take an unofficlal break to teach one semester). I’m glad I took advantage of the match as soon as it was available.
Limit Your Company’s Stock in Your 401(k).
I don’t care if you work for the most fabulous company in the most dynamic industry. No one should have more than five to 10 percent of their investments riding on one stock.
This raises a red flag. I have about 14% of my total investments (non-cash) in company stock in my 401(k). Of just the 401(k), that’s 22%. Half of my company match is directed to company stock. Since my position in the company supposedly has access to Material, Non-Public Information, I’m not allowed to sell that stock unless it is in within a designated period. I made an effort to sell during the last period, but I had some technical difficulties and it didn’t happen.
The company’s stock has had a great run-up since being lised several years ago, and thus my investments are a little heavily weighted towards it. This is a dangerous position to be in and I’ll try to rememdy it during the next period.
If you’re a fan of Suze Orman, check out The Money Book for the Young, Fabulous & Broke.
Updated April 21, 2017 and originally published December 19, 2005.