Stocks and your 401(k) may surge now that Fed rate hikes seem to be over, history shows

Salamendacious@lemmy.world to News@lemmy.world – 131 points – Stocks and your 401(k) may surge now that Fed rate hikes seem to be over, history shows
usatoday.com

News this week that inflation eased more than expected in October solidified the view that the Federal Reserve is done with its most aggressive rate-hike campaign in four decades.

And that could be a boon for the stock market and your 401(k).

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A so the pyramid scheme continues....good?

Do you think 401ks are a pyramid scheme?

Do you think the stock market is not?

Wikipedia uses a good definition for pyramid scheme:

A pyramid scheme is a business model that recruits members via a promise of payments or services for enrolling others into the scheme, rather than supplying investments or sale of products. As recruiting multiplies, recruiting becomes quickly impossible, and most members are unable to profit; as such, pyramid schemes are unsustainable and often illegal.

I don't think that describes a 401k. I don't get money if I convince you to open a 401k. I do pay fees to a company to manage my 401k but I've chosen the lowest fees available to me.

Tell everyone who lost their retirement in a 401k to a big company that it is not a pyramid scheme

Well how do you define pyramid scheme and how do you think it applies to 401ks?

Cite your sources. 401ks are insured against loss. Are you referring to pensions?

Really? Like even during substantial drops in the 2008 crisis? I'm legitimately asking because if this is true then I have some digging to do.

Okay... But the 401k holders aren't being cheated in this instance. They bought an asset that can increase or decrease. It increased for a long time. Then decreased. Then increased again FAR beyond where it was in 2008 just 6 years later. Most investors kept their money in and are doing just fine.

401ks are insured against losing the assets, e.g you own 500 of a particular option, you will always own those 500 unless you sell or that particular asset goes belly up, which is quite rare.

Pensions are a different beast. Closer to the pyramid scheme referenced earlier, and were generally dissolved over the last 40 years by the companies that promised them.

No, no, I get all that. I'm just trying to understand what is meant by 401k being insured against losses...I didn't think that was a thing. I thought any investment whether my personal stocks, 401k, or Roth IRA were all subject to "could disappear overnight kthxbye".

That's not even slightly true. The only differences between a regular investment fund and a 401k are that you don't have to pay income tax on the money you put into a 401k it and you can't withdraw your money before retirement without substantial penalties.