I work at a company that offers a 50% match on 401k contributions, on the first $3500 per year (So $1750 total match possibility). They also have an employee stock purchase plan (ESPP), which basically guarantees a minimum 15% return. (Stock is purchased 85% of the lower price of Jan 1/Jun 30, and Jul 1/Dec 31).
401k contributions are taken out pre tax, and ESPP contributions are taken out post tax.
I have been currently contributing at 5% in the ESPP, and 12% in the 401k plan. I was trying to figure out if that is the best way to do that, or if it would be better to do the minimum necessary to achieve the employer match, and put the rest of that into the ESPP, with the intention of taking the "extra" over what I am currently putting into ESPP, and then investing that into a mutual fund (Such as VFINX, which is currently running a little over 7% 10 year return).
I just can't do the math correctly to see if the 15% return on the ESPP and subsequent reinvestment into a fund outweighs the pretax contribution savings of just putting it into the 401k. (Which under my current distribution is also making slightly over 7%).
Which would be the better option, keep contributing as is, or change to the ESPP with enough still going to the 401k to get the full employer match?