Author Topic: Retirement crisis looming, why not to invest in equities in a 401(k)  (Read 1045 times)

FIRE4Science

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With a retirement crisis looming over in debt USA states and corporate pension funds, losses could become insurmountable with the next stock market collapse with all stocks and bonds investments.

Quite a few financial gurus recommend not investing in the stock or bond markets or inside of penalized by age 401(k) accounts. The global stock markets are heavily leveraged up on buyback programs and insolvency of states overspending taxpayer dollars.

As 3.2 Million baby boomers enter retirement annualy in the USA, the younger generations income spending can not sustain another financial crisis in equities without more extreme debasing of the US dollar and global curriencies.



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Re: Retirement crisis looming, why not to invest in equities in a 401(k)
« Reply #1 on: March 13, 2019, 02:21:24 PM »
Happens about once a decade.

radram

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Re: Retirement crisis looming, why not to invest in equities in a 401(k)
« Reply #2 on: March 13, 2019, 02:29:50 PM »
So no stocks... no bonds.

What, exactly, should you invest in?

Rob_bob

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Re: Retirement crisis looming, why not to invest in equities in a 401(k)
« Reply #3 on: March 13, 2019, 02:33:48 PM »
So no stocks... no bonds.

What, exactly, should you invest in?

Land.

Food.

Guns.

Ammo.

Laserjet3051

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Re: Retirement crisis looming, why not to invest in equities in a 401(k)
« Reply #4 on: March 13, 2019, 02:40:01 PM »
No shortage of preppers around these parts it seems. Just make sure your guns are bigger than your neighbors and your store of ammo will last through the apocalypse.

ysette9

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Re: Retirement crisis looming, why not to invest in equities in a 401(k)
« Reply #5 on: March 13, 2019, 02:52:07 PM »
What a nonsense post. Of course we will see stock market a correction. Most of us will likely live through several. That is the price of admission for investing in the best passive growth mechanism we have for individuals. The hardest part is believing the statistics that say you will be fine provided you don’t do something stupid like panic and cash out. That would be devastating to retirements.

Have you never read into the data and assumptions behind the 4% “rule”? Ever heard of the Trinity Study? Ever realized that for a traditional 30-year retirement even retiring on the eve of the Great Depression you would have been fine if you had stayed invested?

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Back to the previous suggestions though, I can’t believe no one has mentioned investing in beanie babies yet.

fattest_foot

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Re: Retirement crisis looming, why not to invest in equities in a 401(k)
« Reply #6 on: March 13, 2019, 03:04:30 PM »
Luckily for those of us in the US is that the rest of the world is an absolute mess right now and their cost of capital is astronomical.

It's pretty good timing as foreign capital will bridge the gap between the Boomers and Millennials.

Maenad

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Re: Retirement crisis looming, why not to invest in equities in a 401(k)
« Reply #7 on: March 13, 2019, 03:09:24 PM »
What is this, another Thorstach?

"The sky is falling! We're all going to die!"

Yeah, and? What should we do about, Ms./Mr. Precognition?

Don't waste our time with this "financial experts say" b.s. They've also predicted 14 of the last 3 recessions. At least do the work to find some data. But then you'd run the risk of us disproving it, wouldn't you? Safer to just throw out meaningless assertions that can't actually be proven or disproven.

harvestbook

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Re: Retirement crisis looming, why not to invest in equities in a 401(k)
« Reply #8 on: March 13, 2019, 03:13:21 PM »
The longer your retirement, the more your chance of death approaches 100 percent.

ysette9

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Re: Retirement crisis looming, why not to invest in equities in a 401(k)
« Reply #9 on: March 13, 2019, 03:24:23 PM »
The longer your retirement, the more your chance of death approaches 100 percent.
Now that is the thing that scares me.

EricL

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Re: Retirement crisis looming, why not to invest in equities in a 401(k)
« Reply #10 on: March 13, 2019, 03:42:03 PM »
When I was young I was told there would be:

- widespread wars
- famines
- catastrophic natural disasters caused by climate change
- a world wide depression
- mass migrations
- destructive cyber attacks
- massive unemployment
- widespread decay of public institutions

You know what happened? 

All of it.  That was basically 2003-2014. 

I invested in stocks and index funds.  Now Im FIREd.  Find something else to scare me. 

ysette9

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Re: Retirement crisis looming, why not to invest in equities in a 401(k)
« Reply #11 on: March 13, 2019, 03:45:42 PM »
When I was young I was told there would be:

- widespread wars
- famines
- catastrophic natural disasters caused by climate change
- a world wide depression
- mass migrations
- destructive cyber attacks
- massive unemployment
- widespread decay of public institutions

You know what happened? 

All of it.  That was basically 2003-2014. 

I invested in stocks and index funds.  Now I’m FIRE’d.  Find something else to scare me.
Lol
Love it

FIRE 20/20

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Re: Retirement crisis looming, why not to invest in equities in a 401(k)
« Reply #12 on: March 13, 2019, 05:34:56 PM »
OMG!  When I logged into the forum this thread was on top.  Top is in?

shinn497

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Re: Retirement crisis looming, why not to invest in equities in a 401(k)
« Reply #13 on: March 13, 2019, 07:44:58 PM »
The longer your retirement, the more your chance of death approaches 100 percent.

I actually remember reading somewhere that your asymtotic chance of death, year year by year remains constant after a certain age (like 90 or something) I mean it is somewhere near 50% but it isn't 100.

Also bear in  mind not everyone is dead so your chances of dying aren't and ever will be 100%

#ImmortalityGang

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Re: Retirement crisis looming, why not to invest in equities in a 401(k)
« Reply #14 on: March 14, 2019, 11:52:53 AM »
Luckily for those of us in the US is that the rest of the world is an absolute mess right now and their cost of capital is astronomical.

It's pretty good timing as foreign capital will bridge the gap between the Boomers and Millennials.
Urrmwhat?

Eric

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Re: Retirement crisis looming, why not to invest in equities in a 401(k)
« Reply #15 on: March 14, 2019, 12:03:31 PM »
With a retirement crisis looming over in debt USA states and corporate pension funds, losses could become insurmountable with the next stock market collapse with all stocks and bonds investments.

Quite a few financial gurus recommend not investing in the stock or bond markets or inside of penalized by age 401(k) accounts. The global stock markets are heavily leveraged up on buyback programs and insolvency of states overspending taxpayer dollars.

As 3.2 Million baby boomers enter retirement annualy in the USA, the younger generations income spending can not sustain another financial crisis in equities without more extreme debasing of the US dollar and global curriencies.

Quite a few?  I'd be shocked if you could link to even a single credible financial advisor who thinks someone should not invest in a balanced portfolio of stocks and bonds.

But we all applaud your imagination.

EvenSteven

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Re: Retirement crisis looming, why not to invest in equities in a 401(k)
« Reply #16 on: March 14, 2019, 12:15:37 PM »
With a retirement crisis looming over in debt USA states and corporate pension funds, losses could become insurmountable with the next stock market collapse with all stocks and bonds investments.

Quite a few financial gurus recommend not investing in the stock or bond markets or inside of penalized by age 401(k) accounts. The global stock markets are heavily leveraged up on buyback programs and insolvency of states overspending taxpayer dollars.

As 3.2 Million baby boomers enter retirement annualy in the USA, the younger generations income spending can not sustain another financial crisis in equities without more extreme debasing of the US dollar and global curriencies.

Quite a few?  I'd be shocked if you could link to even a single credible financial advisor who thinks someone should not invest in a balanced portfolio of stocks and bonds.

But we all applaud your imagination.

Also one who advises against using tax advantaged accounts.

ChpBstrd

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Re: Retirement crisis looming, why not to invest in equities in a 401(k)
« Reply #17 on: March 14, 2019, 02:27:43 PM »
Rather than relying on a guru, why not become a guru? I'm sure there is an accrediting body somewhere that will take your money in exchange for a guru certificate. Then financial "journalists" will quote you as a guru and middle class people will click your clickbait and view your ads to see which way to zig zag their $5,000 401k.

ysette9

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Re: Retirement crisis looming, why not to invest in equities in a 401(k)
« Reply #18 on: March 14, 2019, 02:58:43 PM »
Rather than relying on a guru, why not become a guru? I'm sure there is an accrediting body somewhere that will take your money in exchange for a guru certificate. Then financial "journalists" will quote you as a guru and middle class people will click your clickbait and view your ads to see which way to zig zag their $5,000 401k.
Like this, you mean?
https://mobile.twitter.com/lastweektonight/status/743096035413786624

fattest_foot

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Re: Retirement crisis looming, why not to invest in equities in a 401(k)
« Reply #19 on: March 14, 2019, 03:11:20 PM »
Luckily for those of us in the US is that the rest of the world is an absolute mess right now and their cost of capital is astronomical.

It's pretty good timing as foreign capital will bridge the gap between the Boomers and Millennials.
Urrmwhat?

Glad you asked! I've posted Zeihan speeches before, and they get updated every few months. I recommend watching the whole thing, but the relevant portion is from 43:00 to 46:10. The first 17 minutes or so are also somewhat relevant (talks about the post-Bretton Woods world and demographics).

Peter Zeihan - 2019 Land Investment Expo - "Millennial consumption"

J Boogie

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Re: Retirement crisis looming, why not to invest in equities in a 401(k)
« Reply #20 on: March 14, 2019, 04:02:33 PM »
Luckily for those of us in the US is that the rest of the world is an absolute mess right now and their cost of capital is astronomical.

It's pretty good timing as foreign capital will bridge the gap between the Boomers and Millennials.
Urrmwhat?

Glad you asked! I've posted Zeihan speeches before, and they get updated every few months. I recommend watching the whole thing, but the relevant portion is from 43:00 to 46:10. The first 17 minutes or so are also somewhat relevant (talks about the post-Bretton Woods world and demographics).

Peter Zeihan - 2019 Land Investment Expo - "Millennial consumption"

I follow him too. I like his oddball takes, but man he totally whiffs at 11:20 with this one:

"By 2022 the majority of boomers will have moved into retirement, and all those investments will be liquidated and will be turned into T-bills and cash because they won't be able to take the volatility because their income is gone... In 3 years, the capital flood will not just be over, it will invert - the cost of capital will quadruple in 3 years."

The confidence in his delivery almost makes up for the fact that he seems to not understand how retirees are responding to low interest rates.

His absurd assumption that this type of transition hasn't already begun shows he isn't even familiar with target date funds.  His absurd assumption that retirees don't hold any stocks, though they held wildly speculative ones ("think enron") just a couple years ago. It also seems like he isn't aware of dividend stocks or REITs.

I dunno, I've enjoyed many of his talks, but most of his other points were in areas where I had little knowledge. This has me thinking he might be taking wild thought shortcuts in a lot of areas.


ysette9

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Re: Retirement crisis looming, why not to invest in equities in a 401(k)
« Reply #21 on: March 14, 2019, 05:07:21 PM »
Ouch. That is some serious nonsense, and not even good quality nonsense. I would expect boomers as a group to shift to more conservative portfolios as they get traditional advice from traditional advisors. My parents, who have been retired a couple of years now, were advised to switch to 60% bonds because “here is how much you would have dropped if 2008 happened”. I’m not entirely convinced that is good advice, but be that as it may. They aren’t liquidating anything and I doubt other boomers with any significant assets are doing either. Maybe the people who only have $50k in total retirement accounts are more afraid of market fluctuations.

Travis

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Re: Retirement crisis looming, why not to invest in equities in a 401(k)
« Reply #22 on: March 14, 2019, 09:09:46 PM »
Luckily for those of us in the US is that the rest of the world is an absolute mess right now and their cost of capital is astronomical.

It's pretty good timing as foreign capital will bridge the gap between the Boomers and Millennials.
Urrmwhat?

Glad you asked! I've posted Zeihan speeches before, and they get updated every few months. I recommend watching the whole thing, but the relevant portion is from 43:00 to 46:10. The first 17 minutes or so are also somewhat relevant (talks about the post-Bretton Woods world and demographics).

Peter Zeihan - 2019 Land Investment Expo - "Millennial consumption"

I follow him too. I like his oddball takes, but man he totally whiffs at 11:20 with this one:

"By 2022 the majority of boomers will have moved into retirement, and all those investments will be liquidated and will be turned into T-bills and cash because they won't be able to take the volatility because their income is gone... In 3 years, the capital flood will not just be over, it will invert - the cost of capital will quadruple in 3 years."

The confidence in his delivery almost makes up for the fact that he seems to not understand how retirees are responding to low interest rates.

His absurd assumption that this type of transition hasn't already begun shows he isn't even familiar with target date funds.  His absurd assumption that retirees don't hold any stocks, though they held wildly speculative ones ("think enron") just a couple years ago. It also seems like he isn't aware of dividend stocks or REITs.

Or that when somebody sells a stock, there just might be someone else looking to buy. It's not like retirement=massive drain of capital.

Quite a few financial gurus recommend...

Guru - totally legit source of information.

MustacheAndaHalf

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Re: Retirement crisis looming, why not to invest in equities in a 401(k)
« Reply #23 on: March 14, 2019, 09:29:46 PM »
@ FIRE4Science - Do you recall posting this 2 years ago, when you were last active here?
"Also, great dividend investing advice comes from Warren Buffet."
Warren Buffet recommends people invest in the S&P 500.  Do you think Buffet is wrong, or your new theory that everyone will sell all their assets the moment they hit retirement?

And just to take this in a constructive direction, what happens if someone decides cash is better than investing?  What if OP's theory is wrong, and the future is similar to the past?

Withdrawing at 4% for 30 years simulated with Vanguard's nest egg calculator:
60% stocks / 40% bonds has a 91% success rate.  You go broke 1 time in 11.
100% cash has a 13% success rate.  You go broke 7 times out of 8.
https://www.vanguard.com/nesteggcalculator

Historically the advice to avoid stocks/bonds ruins your retirement.