5 ms·

It's hard to beat index fund because everyone is buying and holding. 401K is now total like $7-8 trillion dollars. Soon, baby boomers will start the withdrawal

by aynyc 4y ago

It's hard to beat index fund because everyone is buying and holding. 401K is now total like $7-8 trillion dollars. Soon, baby boomers will start the withdrawal wave, I don't know if index funds will be as hard to beat then. I hope so because my retirement is riding on 401K.

missedthecue 4y ago
Most baby boomers are already withdrawing. The very youngest are almost 60. But there are more gen x, millennials, and now gen z that are buying into the market every 2 weeks. The boomer sellers are outnumbered.
- aynyc 4y ago
  The older group of gen x will be withdrawing soon. Also, more participation doesn't mean more money, at least from what I heard last time. Meaning boomers, gen x contributed more due to their career track vs millenials & gen z. Part of me feels like the market is a pyramid at this point, newcomers are paying for older generation in hopes the next generation will do the same.
- robocat 4y ago
  In the olden days when most companies paid dividends, retired people would try to keep owning the shares and live off the dividends. The actual amounts sold by retirees are probably low (say a few percent a year), although I would like to see some numbers per age group. Presumably it is common for sudden death and their shares to be passed on to children?
  - dehrmann 4y ago
    Sort of a side note, but living off the dividends is mostly a psychological thing. The stock price goes down by roughly the dividend amount around the ex div date since a company with less cash on-hand is worth less. If you own shares of company that looks like it should pay a dividend but doesn't, you can simulate it by selling shares. That said, dividends are a decent proxy for company stability and health, but execs also know this, so they play games with dividends to keep income investors interested.

5 ms·

It's hard to beat index fund because everyone is buying and holding. 401K is now total like $7-8 trillion dollars. Soon, baby boomers will start the withdrawal

by aynyc 4y ago

missedthecue 4y ago
Most baby boomers are already withdrawing. The very youngest are almost 60. But there are more gen x, millennials, and now gen z that are buying into the market every 2 weeks. The boomer sellers are outnumbered.
- aynyc 4y ago
  The older group of gen x will be withdrawing soon. Also, more participation doesn't mean more money, at least from what I heard last time. Meaning boomers, gen x contributed more due to their career track vs millenials & gen z. Part of me feels like the market is a pyramid at this point, newcomers are paying for older generation in hopes the next generation will do the same.
- robocat 4y ago
  In the olden days when most companies paid dividends, retired people would try to keep owning the shares and live off the dividends. The actual amounts sold by retirees are probably low (say a few percent a year), although I would like to see some numbers per age group. Presumably it is common for sudden death and their shares to be passed on to children?
  - dehrmann 4y ago
    Sort of a side note, but living off the dividends is mostly a psychological thing. The stock price goes down by roughly the dividend amount around the ex div date since a company with less cash on-hand is worth less. If you own shares of company that looks like it should pay a dividend but doesn't, you can simulate it by selling shares. That said, dividends are a decent proxy for company stability and health, but execs also know this, so they play games with dividends to keep income investors interested.