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
Back in 2008 my retirement account was being managed by a friend that had recently become a “financial advisor” at Edward Jones. I was living outside the US for a few years and was completely unaware how bad the economy was. When I got back and checked in with him and discovered he had made horrible decisions and lost 90% of my money. In his brilliance he decided to sell all of the shares at the absolute bottom of the market and buy bonds with the leftovers. I essentially lost 10 years of my retirement savings because of my stupidity in trusting someone else with my money.