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If one must withdraw from their 401k (sell it's holdings), which they must at a certain age, without new buyers (investors) keeping demand up, the prices would
by jrs235 5y ago
If one must withdraw from their 401k (sell it's holdings), which they must at a certain age, without new buyers (investors) keeping demand up, the prices would deflate. New 401k and Wallstreet investors are needed to keep prices up.
- lmm 5y agoIf the holdings are inherently valuable then their value should be stable regardless of how many people are buying or selling. (In reality there's a spectrum of how speculative any given investment is; basic things like food and land are certainly subject to some speculation, and even hyped penny stocks probably have a nonzero fundamentals case for why they're valuable. But that doesn't mean there's no distinction at all)
- chii 5y agoi dont know in detail how 401k is managed, but if you're nearing retirement, you do not keep such a high allocation of stocks in your account, because the volatility is going to prevent you from being able to accurately plan financially. So it "doesn't matter" where the prices are - because a well planned retirement means you convert some % of your allocation to a more stable asset, like bonds, and live off those bonds. In the mean time, fluctuations of the stocks doesn't affect you as much, and you can strategically sell when the prices are "high".