I overheard someone yesterday talking about how they didn't invest in their 401(k) account because they thought they could get a better return on their own by buying individual stocks.

I wanted to chime in, but figured it would be rude so I need to vent my comments here.

Most companies match your 401(k) investment contributions up to a certain percentage of your income. This is basically free money! You can't find a better investment than getting free money. Your money doubles as soon as you make your 401(k) investment.

Many people max out their 401(k) investments. The strategy of maxing out our 401(k) might be something we can debate, but I can't think of any reason not to invest in your 401(k) up to the limit of your company's matching funds.

Plus, most 401(k) programs and human resource managers are pretty good about encouraging people to diversify their 401(k) asset allocation. I would rather bet on a diverse portfolio of assets instead of trying to pick a few individual stock winners.

OK, I feel better now. I wonder if I should bite my toungue in moments like this or if I should chime in. This guy might lose a lot of his hard earned money due to his lack of financial knowledge.

If I had been a part of the conversation I definately would have mentioned the great investment strategy of accepting free money from our company, but chiming in on other people's investment conversations is not something I would normally do.

I almost want to send him an anonymous message so he doesn't bet all his money on some "pump and dump" investment scam he reads in an e-mail or something. Or he might have good knowledge about a stock and then something unpredictable could happen.

Is there anyone out there who has a good reason why someone would deny company matching funds in order to invest the money elsewhere?