Alternatively 401ks are stupid. They transfer the market risk to individuals which can result in dramatic loss of savings of no fault of the naïve general investor. Once more, they transfer wealth from wage earners to the investment class and by automatically investing more, inflate the divide between rich and poor and drive up valuations. They take dumb investor money and then add regulated inflexibility that locks it up in stock investments. These investors are told to never sell even in a crash. It’s HOLLDD in its original form. Another result in the market is that few 401k investors play anything other than indexes, which means that companies become owned by huge funds that don’t exert any control over the companies they own and don’t care about their performance. This corrupts the corporate level since accountability to investors is weakened.
Otherwise it’s great as long as stocks always go up.
401(k)s give you the flexibility to invest how you want. You can buy bonds, or ETFs, whatever mix you want. Just because the best investment option in the 21st century has generally been stocks doesn’t mean it has to be that way for every investor.
Otherwise it’s great as long as stocks always go up.