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I always think 401k is not fair at all. It kinda forces one to invest and pump the stock prices.
by xiaoyu2006 4mo ago
I always think 401k is not fair at all. It kinda forces one to invest and pump the stock prices.
- jdale27 4mo agoYou don’t have to invest your 401k in stocks.
- brokencode 4mo agoWith most 401k plans, you can choose what you invest in to an extent. You can put it in bonds or other investments if you want.
- idiotsecant 4mo agoThis doesnt fix the systemic issue. Most people put their money in a target fund and leave it alone. Those target funds are at risk of being forced to buy these over-inflated assets. The incentive to do this is there because those target funds and naive investors exist.
- JumpCrisscross 4mo ago> Those target funds are at risk of being forced to buy these over-inflated assets Target funds are diversely managed. This isn’t a real concern.
- idiotsecant 4mo agoThe diverse investment is the reason that funds will be forced to buy these worthless stocks. It's a direct transfer of money from the working class to the extreme capital class. If you're good with that, I'll send you my PayPal so you can get me my 5 bucks. It's a tiny fraction of your overall cash flow, whats the big deal?
- brokencode 4mo agoTrue, that’s an argument against the typical passive, broad market, market cap weighted fund like VTI or SPY. But there are many funds that have different strategies, both passive and active. Such as by investing based on value, quality, dividends, etc. I get that the average person doesn’t know this, but the 401k doesn’t inherently force somebody into broad market funds.
- idiotsecant 4mo agoWhen you destroy pensions by crushing organized labor, create 401k incentives, and place your new captive audience by default into a certain investment class, a whole lot of people are going to leave it there. Whether the provider forces anyone to do anything is irrelevant, it creates second order impacts that ultimately lead to what is perhaps the greatest attempted fleecing in market history
- brokencode 4mo agoPensions also invest in stocks, though the difference is that pensioners have no control at all. Of course, they also have guarantees of a certain level of income. I think the main problem with the 401k is that not enough people actually contribute to one. Or they don’t put in enough. But I very much doubt the average person who’d invested enough over several decades in a 401k feels like they got fleeced.
- bluGill 4mo agoUntil someone can come up with a better option though... Note that a pension plan that invests for you blindly is no better - either the returns are so bad that they are a scam, or they are investing in stocks anyway and so you get the same results but less control. Similar for things like social security, they are either worse options or you need to pump stocks.
- granra 4mo ago> Until someone can come up with a better option though... A welfare state maybe?
- Ray20 4mo agoEh? Like in North Korea?
- SubmarineClub 4mo agoAnd the money to pay for all those retirees comes from…where?
- hdndjsbbs 4mo agoThis is what financial capitalism and "democratizing finance" has meant in practice. Rich people have access to different types of investments, and by the time those trickle down to common investors the juice has all been squeezed out. Whatever the trend is, by the time you hear about it the market has already been arbitraged by faster investors with more resources. We are not going to come up with a market-based solution to fix income inequality. The solution, as much as people in the dwindling middle class resist it, is a strong social safety net coupled with a hard reset on taxation and housing policies. Nobody should be homeless, nobody should be allowed to starve, but you might have to accept that your 401K goes down in exchange for a government guarantee of housing and food. This is hard for people to accept because they currently have equity in their home or a 401K to save them from starving. But those are transient, individualistic solutions. You can lose your house. You can lose your 401K. Society should be taking care of each other in a broader way than letting everyone accumulate a little, private pile of money.
- throw-the-towel 4mo agoThe middle class resists it because we know who will be taxed through the nose to fund this safety net. Hint: it's not the ultra rich.
- hdndjsbbs 4mo agoWhy the fuck not? This is such a stupid perspective, "we shouldn't make things better because I imagined a way it could be bad".
- throw-the-towel 4mo agoIt's you who is imagining things here, I'm speaking from my actual experience in an EU country.
- WarmWash 4mo ago>Rich people have access to different types of investments, You mean hedge funds and private equity/private credit that all under perform S&P500?