I’ve had a few people in my life tell me that they lost X % of their 401k during the (insert financial crisis).

Recently when a friend told me they lost 50% of their 401k in the 2008 time, I said: “Well you didn’t really lose anything, because you still had the stocks, and even though they were worth less, you still had the same number of stocks, so you could have waited it out?”

To which my friend replied: “That would be true if the person managing my 401k didn’t sell”.

I hadn’t actually thought about that. I mean personally most of my funds are in age based target funds, but those funds are also managed by someone, right? So is there a way to prevent someone from selling your stocks if the economy tanks? I have a pretty long retirement horizon (still in my 30s) so I can weather the storm for a bit.

Edit: Thank you everyone for the insightful answers. This really helps to clear things up

  • @[email protected]English
    3•1 year ago

    You can self manage your retirement funds, but buy and hold will do you no good if the company goes bankrupt.

    For every fund manager who sold Amazon in the ‘01 dot com crash, there was another who was convinced WebVan was going to turn it around.

    If you’re invested in broad indices like the SP500, a market downturn only matters if you’re near retirement, or else you just wait for the recovery.