401Ks, in general, are a terrible substitute for pensions and social security. The GOP wanted to push Americans’ retirement funds into the stock market, and they did that with 401Ks.
I ran some basic analysis a few weeks ago, and even with the corporate matching on 401Ks, due to the poor fund investment options available in most 401Ks, they underperformed index funds over a 30 year period.
Yes, that means many people who contributed to their 401K at full amount, even with matching, have less money than someone who just invested in SPY or VOO over the same period.
Financial vehicles for retirement should be relatively low risk, with that risk becoming even lower as you reach retirement age. Investing in a single stock, no matter what it is, is a high risk. Sure, you can look into the past and say “if you’d just invested in Stock X,” but that’s with the benefit of hindsight.
The only way you should be managing your 401K is into an index fund with low fees. That’s it. Everything else is gambling.
confused by your comment because my 401k contributions go directly towards index funds. are you talking specifically about target date funds, or something else?
It’s laughably obviously that this individual has zero experience with individual retirement accounts and is, in fact, making up this alleged analysis. There is no way they even have access to such data.
Target year funds will almost always underperform SPY, by design. They are broad market funds which taper into bonds over time. Either way, I have never seen a 401k which doesn’t have many, many index tracking options.
Most 401ks these days have very few restrictions on how they can be invested. And you can always roll them into an IRA with basically no restrictions. You can literally day trade options on margin in most IRAs.
401Ks, in general, are a terrible substitute for pensions and social security. The GOP wanted to push Americans’ retirement funds into the stock market, and they did that with 401Ks.
I ran some basic analysis a few weeks ago, and even with the corporate matching on 401Ks, due to the poor fund investment options available in most 401Ks, they underperformed index funds over a 30 year period.
Yes, that means many people who contributed to their 401K at full amount, even with matching, have less money than someone who just invested in SPY or VOO over the same period.
Financial vehicles for retirement should be relatively low risk, with that risk becoming even lower as you reach retirement age. Investing in a single stock, no matter what it is, is a high risk. Sure, you can look into the past and say “if you’d just invested in Stock X,” but that’s with the benefit of hindsight.
The only way you should be managing your 401K is into an index fund with low fees. That’s it. Everything else is gambling.
confused by your comment because my 401k contributions go directly towards index funds. are you talking specifically about target date funds, or something else?
It’s laughably obviously that this individual has zero experience with individual retirement accounts and is, in fact, making up this alleged analysis. There is no way they even have access to such data.
Target year funds will almost always underperform SPY, by design. They are broad market funds which taper into bonds over time. Either way, I have never seen a 401k which doesn’t have many, many index tracking options.
Most 401ks these days have very few restrictions on how they can be invested. And you can always roll them into an IRA with basically no restrictions. You can literally day trade options on margin in most IRAs.