Need advice on where to invest for retirement

Quote from 0mega : Edit:Good point. Stocks are risky indeed make sure your company has a good history before comitting to a decision like the one I said.

To expand on your comment, getting your paycheck from and hanging your retirement hat on the same company is very risky. It's putting too many eggs in one basket. If the company goes out of business, you not only lose your paycheck, you lose a big chunk of your retirement along with it.

Companies have life cycles just like people. GM used to be seen as invincible. Kodak used to be a blue chip stock. KMart used to be the largest retailer in the United States. All have gone bankrupt. Sears used to be the largest retailer in America. It's been on it's last breath for years.

It's too risky to hope to build a healthy retirement involving the same place you get your paycheck from. It's putting too many eggs - huge eggs at that - in the same basket. If the company goes bad, you can lose your investment and your paycheck. It also involves the opportunity cost of not having invested in better options.

I think it's bad for employers to promote buying company stock. It's too risky and it can end in a tragedy that didn't have to happen. Not to mention, executives will pump up the stocks by promoting buying company stock to their employees. Then what do they do? Most of them sell their stock, not buy or even hold it.

The following are two great articles by SmartMoney magazine that talk about how all too often we buy company stock because we're familiar with the company and we feel more knowledgeable about the company and stock. They also talk about how we buy company stock with too short of vision in mind, how we often take a rear-view mirror approach, how we typically like to buy when the market or stock price is rising and how all of this is too risky. In short, they talk about how buying company stock is risky and, financially, is a bad idea.

Is it Time to Reconsider Company Stock? [smartmoney.com]
The Dumbest Investment Move [smartmoney.com]

Quote from saladdin : You pay taxes on a roth or traditional, it's just a matter of when. If I was in the 28 bracket and expected to be in a lower bracket when I retire then I would do a traditional. You get the tax deduction now, then when you pull it out at retirement you would pay the tax in your new lower retirement tax bracket (not current 28). If I expected to be in a higher tax bracket when I retired, I would do a ROTH. Pay taxes at the 28 rate and in retirement you can pull it out and not have to pay it on your new higher bracket. With traditional IRAs, you avoid taxes when you put the money in. With Roth IRAs, you avoid taxes when you take it out in retirement. It depends on tax brackets. 99% of people will be in a lower bracket when they retire because, well, you're not working any more. It's damn hard to retire with so much money you will gain tax brackets. I know I won't. So I'll take my deduction now and when I retire in the 15% bracket, pay taxes on it then (instead of current 25).

My understanding is you can't contribute to a traditional IRA if your employer offers a retirement program...therefore he would be ineligible and a Roth IRA would be his best choice.

Quote from Brian1 : Even at a 15% discounted rate, buying your employer's stock is too risky. You may want to reconsider that. Buying your own employer's stock is not a good financial idea.

I would agree with this except that if they are giving you a guaranteed 15% discount, I do not see why you would not want to take it unless they restrict you from selling it immediately. Where else you going to get a low risk 15% profit?

As soon as they give you the stock, turn around and sell it immediately. There is little to lose unless there is a restriction on the timeframe to sell or the stock completely tanks the very next morning after they give you the stock which is highly unlikely in most cases (unless you work for a company on the brink of bankruptcy or the like). Yeah you will pay taxes on the gain as ordinary income instead of capital gains because you did not hold it for 12 months, but so what? Take the money and run imo.

Quote from YanksIn2009 : I would agree with this except that if they are giving you a guaranteed 15% discount, I do not see why you would not want to take it unless they restrict you from selling it immediately. Where else you going to get a low risk 15% profit? As soon as they give you the stock, turn around and sell it immediately. There is little to lose unless there is a restriction on the timeframe to sell or the stock completely tanks the very next morning after they give you the stock which is highly unlikely in most cases (unless you work for a company on the brink of bankruptcy or the like). Yeah you will pay taxes on the gain as ordinary income instead of capital gains because you did not hold it for 12 months, but so what? Take the money and run imo.

.....Of course there is a time restriction on selling.