Booms, Busts, and Recoveries Message Board

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Strategies & Market Trends : Booms, Busts, and Recoveries

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To: Raymond Duray who wrote (15215)	2/20/2002 10:11:46 AM
From: AC Flyer	Read Replies (1) of 74559

Ray: There's an element of truth in what you say - 401(K) participants who don't take the time to educate themselves regarding the options in their plan and the relative risk are vulnerable. But how is that different to anyone else who invested any time, anywhere in something they didn't understand? Here's the glass half full viewpoint. 401(K)s have given workers the opportunity to invest pre-tax dollars, often with a company match, in (relatively) high return financial vehicles. Anyone who has been in a 401(K) since 1997 or earlier and made conservative choices has done better than they would have done in a money market fund. You can quibble with dates or whatever if you like, but 401(K)s have fundamentally been a good thing for the majority of participants. The media love disaster. Bad news sells. We only hear about the people whose 401(K) balances are down 50%, 70%, whatever - even then, we NEVER hear what their total 401(K) conributions were in comparison to their post-decline balances. We don't hear about the majority who have done just fine. 401(K) hysteria is just one more aspect of the bear market in expectations that many are experiencing.

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