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I think there are 3 reasons I’m doing this: 1) I believe that the chance of a stock market crash within 2 years is greater than 50/50. That’s only a guess of

I think there are 3 reasons I’m doing this: 1) I believe that the chance of a stock market crash within 2 years is greater than 50/50. That’s only a guess of course. 2) the downside of losing my life savings would be far more devastating than the upside of doubling them- the risk/reward profile is extremely asymmetrical. 3) the people who can trade the news fast will get out fast in the event of a crash, and the 401k people will be left holding the bag, which means that stock market volatility is essentially a way to transfer wealth from the middle class to the super wealthy. I’m not interested in that. To be frank I wish that 401ks didn’t exist at all and the government just increased social security payments a certain percentage every year. If the economy is growing as fast as the payments then it shouldn’t be an issue right? The fact that I am essentially forced to play poker with my retirement account is very frustrating. The whole point of saving money for retirement is to reduce risk, it’s supposed to make me feel secure not give me one more thing to worry about. But, my wife has all her 401k in stocks, so between the two of us we’re still split 50/50, so I guess I exaggerate when I say it’s all t bills. So that’s my thinking.

ericmay 6y ago
> 1) I believe that the chance of a stock market crash within 2 years is greater than 50/50. That’s only a guess of course. Right. It's a guess. But it's no more good of a guess than the stock market won't crash. Just keep that in mind. > 2) the downside of losing my life savings would be far more devastating than the upside of doubling them- the risk/reward profile is extremely asymmetrical. Not sure how old you are, but if you're not near retirement age you wouldn't lose your life savings if you were invested in something like a total stock market index fund. If you lost all of your life savings, then the entire economy collapses (back to beans). Granted, it COULD be the case that the market crashes, say, 50% and doesn't recover for 20 or 30 years. But I think too many people have too much to lose, and it would likely require a total civilizational collapse. Think about it this way. The market didn't collapse to nothing during World War I or World War II or the Great Depression. > 3) the people who can trade the news fast will get out fast in the event of a crash, and the 401k people will be left holding the bag, which means that stock market volatility is essentially a way to transfer wealth from the middle class to the super wealthy. I’m not interested in that. I'm not sure I'm following but willing to listen. The 401k people just...don't sell their 401ks and if there is a crash then they just wait until valuations return, meanwhile continuing to invest and buy shares of companies at a discount and also reap dividends, share buybacks, and other vehicles that increase shareholder value. Volatility would be more of a concern if you are in retirement or near retirement (which you may be), because it it could cause a disruption in your retirement plans or cash flow. > To be frank I wish that 401ks didn’t exist at all and the government just increased social security payments a certain percentage every year Personally I'd never want this. I'd actually prefer we got rid of social security. The government over time has shown me that it is completely inept at funding these plans. The problem is that it seems people are also unwilling or uninterested in saving and investing. Social security is projected to be underfunded pretty much forever, and I doubt that the population has the appetite for continued increases in taxation to fund it. I'm not sure you could tax people enough to pay for it. But the 401k is not really the same thing as social security and I think it's a bit of an apples-to-oranges comparison. All it is, is the government not taxing some of your income so you can invest it. It's a pretty great plan and many people across the world envy it. The only other thing I'd say here is that you could check out The Little Book of Common Sense Investing [1] and see if that changes your approach. I'm willing to bet others on Hacker News would endorse it as a must-read in the personal finance space. Another thing to look at if you want to stay in the treasury space are TIPS, or Treasury Inflation-Protected Securities [2]. [1]https://en.wikipedia.org/wiki/The_Little_Book_of_Common_Sense_Investing https://en.wikipedia.org/wiki/The_Little_Book_of_Common_Sens... [2]https://www.investopedia.com/terms/t/tips.asp https://www.investopedia.com/terms/t/tips.asp

ericmay 6y ago

> 1) I believe that the chance of a stock market crash within 2 years is greater than 50/50. That’s only a guess of course. Right. It's a guess. But it's no more good of a guess than the stock market won't crash. Just keep that in mind. > 2) the downside of losing my life savings would be far more devastating than the upside of doubling them- the risk/reward profile is extremely asymmetrical. Not sure how old you are, but if you're not near retirement age you wouldn't lose your life savings if you were invested in something like a total stock market index fund. If you lost all of your life savings, then the entire economy collapses (back to beans). Granted, it COULD be the case that the market crashes, say, 50% and doesn't recover for 20 or 30 years. But I think too many people have too much to lose, and it would likely require a total civilizational collapse. Think about it this way. The market didn't collapse to nothing during World War I or World War II or the Great Depression. > 3) the people who can trade the news fast will get out fast in the event of a crash, and the 401k people will be left holding the bag, which means that stock market volatility is essentially a way to transfer wealth from the middle class to the super wealthy. I’m not interested in that. I'm not sure I'm following but willing to listen. The 401k people just...don't sell their 401ks and if there is a crash then they just wait until valuations return, meanwhile continuing to invest and buy shares of companies at a discount and also reap dividends, share buybacks, and other vehicles that increase shareholder value. Volatility would be more of a concern if you are in retirement or near retirement (which you may be), because it it could cause a disruption in your retirement plans or cash flow. > To be frank I wish that 401ks didn’t exist at all and the government just increased social security payments a certain percentage every year Personally I'd never want this. I'd actually prefer we got rid of social security. The government over time has shown me that it is completely inept at funding these plans. The problem is that it seems people are also unwilling or uninterested in saving and investing. Social security is projected to be underfunded pretty much forever, and I doubt that the population has the appetite for continued increases in taxation to fund it. I'm not sure you could tax people enough to pay for it. But the 401k is not really the same thing as social security and I think it's a bit of an apples-to-oranges comparison. All it is, is the government not taxing some of your income so you can invest it. It's a pretty great plan and many people across the world envy it. The only other thing I'd say here is that you could check out The Little Book of Common Sense Investing [1] and see if that changes your approach. I'm willing to bet others on Hacker News would endorse it as a must-read in the personal finance space. Another thing to look at if you want to stay in the treasury space are TIPS, or Treasury Inflation-Protected Securities [2]. [1]https://en.wikipedia.org/wiki/The_Little_Book_of_Common_Sense_Investing https://en.wikipedia.org/wiki/The_Little_Book_of_Common_Sens... [2]https://www.investopedia.com/terms/t/tips.asp https://www.investopedia.com/terms/t/tips.asp