Which of the following, if true, might make the option more appealing to a prospect?
A) In recent months, the stock market has become more bullish, making mutual funds a better bet.
B) The firm pays the maintenance fees for the investments.
C) Employees may choose the amount set aside each month, up to 10 percent of gross income, which is untaxed until the money is removed from the fund.
D) Over a ten-year period, the mutual funds included in the firm's option have accrued at a rate equal to the consumer price index.
E) The firm allows employees to select from and move funds around to a wide range of mutual fund options, some more conservative than others.
Answer: E
Explanation: E) A new employee will place more of a premium on his or her ability to participate in the investment process in the here and now, rather than assurances that the funds will accrue later. So Choice E is correct: employees will appreciate being able to protect the investment at difficult times and having the chance to move it to a fund that can bring a higher return during times of growth. Investments merely keeping up with inflation (Choice D) are not attractive, and we can't be sure that the recent economic downturn that reduced the value of portfolios was temporary (Choice A), but reassuring workers that better times will come is not a way to make the option intrinsically more attractive. Paying overhead fees (Choice B) and letting workers choose the level of their involvement (Choice C) do nothing to make the savings option more beneficial if the value of the investment is unstable and liable to loss of principal.
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