I was thinking about this after having read so much lately about Blackrock and the like that essentially have so much damn money they control they can steer countries.
I don't know if this applies to Blackrock specifically (like I said this is a shower thought not a researched document), but I do know that 401k/retirement funds make up a lot of dollars that some powerful management groups are out there using for whatever the hell they feel like.
I've got one. I've been a corporate employee for over 15 years now, in all honesty it's a good past time in that it's not all that difficult for the income. In all that time I've put in just small regular amounts to the 401k, enough for company to match it and that's it. That match is where the problem comes in, for me almost no matter what it's never a bad deal to put in those small amounts because part of your pay is tied to that match essentially. Yet, I really don't have much control over it. Sure, I can pick some different "funds" that are managed to pretty much do what they claim, but all they really have to do to keep everyone quiet is track the stock market like they say they will.
After all this time though, I think the 401k is my biggest asset, or if not it's close. I don't really dabble in other paper investments outside of the occasional stock trade or something and it's not much. I generally like tangible assets better, e.g. real estate.
I'm just one person out of tons that essentially are "forced" into this deal by making it so much of a no-brainer. Then you have those who parrot on things like "maxing out retirement savings" and things I totally don't believe in. I'm sure some buy into those too. All in the end, to give a few big corporate fund managers the power to do whatever the hell they want.
Social security is the big scam. A 401k System, australian superannuation, to the greatest extent possible, is the way to go.
It's not perfect and yeah letting untrustworthy corps have blind control of it is definitely an issue, but you'd be far better as a country with more 401k, less pyramid scheme social security like aus went for.
This is very relevant. Every month, I watch 6% of my paycheck disappear to the government, and my employer pays that 6% again. That is money I can do nothing with, and see not one cent of, until the government decides it's OK - and at the rate things are going in a few decades when I would qualify for getting Social Security, there's probably going to be nothing left (or, money printer go BRRRRRR making what is left worthless).
If I could pull all the money I've contributed (and will contribute) out of social security and stick it in a 401k, with the provision that I'll never collect a cent from it, I would sign that document right now. I'd prefer just pull it into my bank account but at least a 401k would give me limited control over it, and I would know how much there is and where it is.
I guess the question is "compared to what alternative"? The 401k replaced the pension, and those too were gigantic funds managed by a handful of people, corporations, and governments; and which themselves invested in a handful of securities (mostly bonds issued by other gigantic corporations and governments). People had even less control over those.
I think the problem is lazy/uninformed investors who just go for the major ETFs and leave it at that.
Maybe in my wall of text I missed the main point, which is that within these 401(k)s you are often given no choice other than a few major funds and leave it at that.
I agree with that, but I'm not sure it's the main problem.
How many people invest properly instead of letting Blackrock do it for them?
At least their AUM is starting to fall.
https://archive.ph/6Gj9l
Some plans offer self directed accounts that allow you to trade individual markets.
I stopped mine all together. Vanguard. My employer matches 6% but my company is also affiliated with the WEF so.....no more of that. It's all a scam. Glad I caught on to it. Just sucks I'll never see that money ever again but at least I won't be contributing anymore.
Well each person is different and what people want out of life is different
Some will want to ensure they are saving for retirement and others just want to work until they’re dead
Some like the passive investing of throwing some money at their mutual funds each pay or whatever, and others like to actively get involved with stock picks or real estate, etc
There is stability in making regular steady deposits into some funds and, while you sometimes do better on your own picking out the right stocks or property to buy, not everyone wants to do that and sometimes those picks aren’t so hot and you would’ve been better off with your average mutual fund
Buying stocks on your own usually means you’re paying trading fees with each transaction, and for people who want to make regular deposits those fees add up
Worth mentioning at this point that once you attain a certain dollar value in your funds then maybe the annual fees you’re spending on the MER is now pretty rich and the savings on transaction fees and reporting isn’t worth the cost and so you want to do something else with it at that time
Going it on your own means that you’re now doing all of your own tax reporting and value tracking your gains and losses versus when you buy funds the investment firm/insurance company/whoever you’re buying through is doing your tax tracking and reporting for you
Statements, someone to call for customer service, etc
Worth comparing those details to the other options you suggested when considering what to do with your savings money
Was the 401k or mutual funds in general a scheme to make the bankers richer? Not on its own, as you could just go to the guy next door if the fees were too high at your current place
Competition usually takes care of ensuring your costs stay low or else someone else will come in and do the job for less and scoop up the business
Everyone is owned by the same handful of companies now in 2022 but that wasn’t the 401k or mutual funds doing that on their own
You mentioned you’re getting a matching contribution from the employer and NOBODY out there is giving you free money on top of your deposits like that, so, for retirement savings, you should likely be maxing out your employer match and then after that yeah do your own thing