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When you take out 401K loan, the plan sells equivalent amount of shares and gives you the cash. So it's still causing market sell off. As you pay it back the sh
by dmitriy_ko 6y ago
When you take out 401K loan, the plan sells equivalent amount of shares and gives you the cash. So it's still causing market sell off. As you pay it back the shares are bought again.
- greenyoda 6y agoA mutual fund doesn't own specific shares of stocks on behalf of an individual - it's just one big pool of assets, and the individuals own shares of that pool, not the underlying securities. So if there's still lots of cash coming in every month from new payroll deductions, there might be no need for the fund to sell stocks to pay out a loan. They'd just buy fewer stocks that month. They'd only have to sell stocks if the total cash going out (loans, plus distributions to retirees) exceeded the total cash coming in (payroll deductions).