You would be better off in the long run by cashing out the company stock and opening a ROTH IRA.
Another answerer suggested that you could open your ROTH and buy your company stock within the IRA. While this is technically possible, it is still a bad idea for 2 reasons:
1. You would still not be diversified.
2. You would be restricted (or should be) on when you can trade the company stock. Insider trading rules may provide only limited windows throughout the year in which you may buy, sell, or otherwise trade your company stock.
EDIT 1: Diversification has nothing to do with the account TYPE (ROTH, IRA, 401K, BANK), but with the investments within the accounts, as well as the value of the accounts. So if your 401K and IRA are invested in properly allocated mutual finds, they are probably "diversified". But for example, if all of your 401K and IRA is invested in (let's say) "aggressive growth" funds - - then they are not diversified.
It also has to do with the amount of money in each asset class. - - If you have only $10K in your IRA and 401K, then your company stock would represent 25% of your allocation. This would not be considered to be adequate diversification because 25% of your total assets would be in one company stock.
Your adviser probably understands all of this. They are recommending a ROTH IRA because of your small emergency fund. You can make withdrawals of your ROTH contributions without penalty. So the ROTH could "double" as your emergency fund. It's not ideal. You would be far better off keeping a decent emergency fund in a bank savings account.
Before investing your "found money", you really need to decide when you think you might need to use it. Investing it in "the market" only makes sense if you are investing for long term - - like 5-7 years or more. If your time horizon is shorter, you are looking at bank CDs or savings accounts. And you're right - - you won't make any big bucks there, but that's the way it is.
I don't know the value of your retirement accounts (IRA and 401K), or your annual earnings, or your net worth, or your marital status (hopefully, your financial adviser does). But if I were you, I would make sure that I first have savings of 3-6 months of living expenses in a bank money market (or CD) as an emergency fund. I would then decide if my retirement accounts are adequately funded (for most people - - this is a "no"). If not - - I opt for the ROTH IRA.
In fact, I would opt for the ROTH IRA for ALL of my future IRA contributions. The benefits of a ROTH over a TRADITIONAL IRA are too many to list - - - but one of the benefits for YOU is that it will give you "tax diversification".
You should probably run these ideas past your adviser, because she will know your situation better. But be a little careful if she continues to insist that you use your funds for a ROTH instead of a legitimate emergency fund. She probably prefers using the ROTH as an emergency fund over a bank account because she will get a commission when she sells you the ROTH. But the better place for emergency money is in a bank account.
EDIT 2: Your emergency funds aren't meant to "give you a return". Your emergency fund is insurance. You don't get a "return" on insurance. It's there to protect you from dipping into your retirement accounts, or taking a loan, or using a credit card. If you invest it in the stock market within your ROTH, and have an emergency while the market has tanked - - you will have a REAL emergency. It IS possible to put it in a ROTH and invest it very conservatively - - but there's really no point in doing that - - - you might just as well put it in a bank money market.
I have a pretty decent emergency fund that I end up dipping into maybe twice a year (unexpected dental/medical/car repair/home repair....you name it). If I had to make a withdrawal from my ROTH IRA every time I needed to tap my emergency fund, I'd have gobs of paperwork at tax time. It's not worth it.
You never did say if you have any current debt. If you do - - then the number one priority is to pay it off. That priority would be WAY above investing. If you still have that FORD Focus - - and it has a loan -- then pay it off! Think of it this way: If your car was paid for, would you go get a title loan against it so you could have money to invest? I would hope not - - - but that's exactly what you're doing if you don;t pay off your debts before "investing".
When you put money into a Roh IRA, you are esentially creating a retirement portfolio. Once you create this account you can choose how to invest those funds, so provided the company you set up the roth ira with doesnt have any restrictions on where/what you can invest in....you can open the roth ida and use the funds to purchase the stock of your company.
you are esentially creating a retirement portfolio. Once you create this account you can choose how to invest those funds, so provided the company you set up the roth ira with doesnt have any restrictions on where/what you can invest in....you can open the roth ida and use the funds to purchase the stock of your company.
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The nice thing about your stock plan is the discount. You are ahead immediately. Anytime there is free money involved I say take advantage. My mother used her company stock plan as her main savings mechanism (also had an IRA though) and was a millionaire when she retired.
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I am trying to decide between two investment options. I had company stock with my current company which was recently bought out. Since this company was a privately held company, I was paid for that stock. I was trying to think what to do with this money. I had originally spoke with my financial adviser about this and she suggested putting it in a Roth IRA.
However, I just received a corporate communication email the the buying company is now offering us option to buy their stock. I am torn on whether to invest this money into buying new stock with my new company or go with the IRA. By these 2 companies combining, we are the largest in the industry and I can only imagine the stock has gone up as a result. Of course as an employee, I get a discount on the purchase.
The amount I am looking to invest is approx $2,500.00
