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Subject:  Re: 401k w/company stock Date:  8/4/1998  2:33 PM
Author:  ahatcher Number:  4851 of 102812

Greetings and Salutations! First-timer on the boards here. I have several questions. I am a new
employee of The Travelers Group, and I am currently considering my 401k options. I of course
have several mutual fund options, but I would be interested in opinions regarding the degree of
Foolishness involved in choosing to fund my 401k solely with company stock. I think this might be a
good option because: it is Travelers stock, a strong Dow performer, good future, it has far, far
outperformed the mutual fund options (34.75% annualized, last three years, we are told), and I can
get it at a 5% discount. Other salient factors: there is no company match, and we can also buy
stock through after-tax payroll deductions at a 10% discount, with brokerage fees waived. Also,
since there is no company match, should I consider just building a Foolish Four portfolio within an
IRA? I am married, so I could do the same for my wife, and sock away our first $4000 this way. I
do intend to build a Foolish portfolio regardless of what I do with the 401k.

That's a question you'll have to answer for yourself. Are you comfortable with the level of diversification if your 401k is all in one stock? I would just note that a %5 discount and the waiver of brokerage fees can be considered "matching". It's money for nothing.

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