I get employer contributions that will vest at 20% per year. My question is - how do I invest the unvested funds? It seems like I should go very conservative, since it has a leveraging effect.
For example: I contribute 1k and employer contributes 1k, 0% vested. I invest the 2k then the economy tanks. I lose 50%, plus I lose my job before anything vests. I now have 1k in the account, but my employer takes back 1k, leaving me with $0! Is this right?
On the other hand, say the market doubles, but I lose my job. Then I will end up with 2k.
Seems like vesting skews the risk/reward such that it's best to keep unvested funds in cash equivalents. But if I make it to 5 years, then I'll probably wish it had been invested more aggressively during that time.
Anyone else think this through yet?