TO INVEST OR NOT TO INVEST - THAT IS THE QUESTION

My employer offers 401k. They match 50% of the contributions dollar for dollar. I'd be "stupid" NOT to participate in such a plan!
I've heard this argument for investing in 401k over and over again. The "so called" financial gurus tout 401k as the best thing since sliced bread and the best way for the common Aamerican to get rich. Suze ORMAN has been bombarding the airwaves (wire-waves for internet) with this message. See here, here and here
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The financial experts say, "you're stupid" if you don't participate in the 401k plan. You're stupid to leave that employer match out on the table.

Don't get me wrong, I don't have any problem with the employer match. Also the tax benefit of investing in a 401k are astounding. I ask the following simple questions to anyone participating in 401k plans.

1. Is it possible for you to lose 50% of your money in a 401k plan? What steps are you taking (or can you take) to ensure that it doesn't happen to you? Does the saying "easy come easy go" sound eerily applicable to you
2. Is it possible for the 401k administrators of your plan to conspire so that they maximize their own profits?
3. Does it cost your anything to re-balance your 401k portfolio? Can you buy and sell funds in your 401k on a daily basis with no penalties?
4. How sure are you that the prices of the funds that you are buying are not over-inflated? How sure are you that you are getting a good deal?
5. Could you do better with the "after-tax" money minus the employer match than investing it in a 401k?

On a side note, it is interesting to note that most (if not all) government agencies still stick to the good ol' pension plan. Your senator, for example, are eligible for a full pension with 5 years of service after 62 years of age (source).

I used to contribute religiously to a 401k plan. I soon decided that the 401k plan was not for me. I've first hand seen my account drop 2%-3% on a daily basis. Of course I've also seen it go up a few percent points in a day. The part I don't like is that lack of control I have over such events. Do I know when the market is going to go up or down? HECK NO. Do I know whether we are in a recession or not? Do I know if the dollar will continue to fall or inflation will rise or fall? HELL NO! Do I know if the new president will wage a costly war against IRAN? I DON'T KNOW? With so many factors that "may" be influencing the markets and with the uncertainty in the US market, I'd much rather not take the risk. I strongly believe that I can do better with the money that I would have otherwise contributed to my 401k and have stopped adding into the plan since.

So in short, be very CAREFUL with what you do with your money. Don't follow the crowds. The best that you can do is learn to hold onto your money and don't let anyone tell you what to do with it!