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When people say they lost their 401k
(lemmy.world)
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this post was submitted on 03 Feb 2024
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If it's a "personal" one it does whatever you or the person you pay to manage it wants it to do.
A lot of it is by "shares" for company/government 401ks though.
Depending on the economy one share might be worth $20 or $200.
Some people in multi index funds will try to time it. When the market is bad they switch to the high risk index, knowing the fund rarely sells stock and wait for prices to go up. When their up and don't think it will last, they put it in the safe but practically no interest indes.
Most people aren't good at that.
"Lifecycle index's" start high risk when you're young, and slowly shift to low risk when you get close to your chosen age.
Because at 30 a crash on your 401k doesn't matter, if anything it's when you should max donations. But a recession the year you're gonna retire means you keep working till your 401k.rebounds.
Most professional investors aren't either. Something like 70% of professionally managed funds fail to beat their index over a 10 year period, and the number goes down from there. And these aren't idiots, they have a lot of education and professional experience, yet they still fail.
If timing the market worked consistently, everyone would do it. And if everyone did it, that means nobody times the market (stocks go up and down based on supply and demand, not some magic, hidden force). It's highly unlikely that any individual will consistently win by trying to time the market.