The stock market is not a bank
It seems that many Americans see their 401k accounts as a retirement bank account, and depend on it almost exclusively for their retirement funds. Sure, there's Social Security, but who knows how long that will last... The problem with 401k accounts and anything that puts all of your money into the stock market, is that the stock market is not a bank.
Some people might suggest that this is a good thing, but I think recent events illustrate that it is not always a good thing. Making money on the stock market requires one of two things. Either, 1) you are very intelligent and make it your full time job, or 2) make sure everything continues with 'business as usual'. You can also delegate your money to someone else, to meet the first option. However, when there are hiccups in the process, it can be dangerous for any investor.
It is important to also set up a regular savings account for retirement, and most importantly, to avoid debt as much as possible. These two things will stabilize your personal economy more than anything you can do with a stock market based account.
Some people might suggest that this is a good thing, but I think recent events illustrate that it is not always a good thing. Making money on the stock market requires one of two things. Either, 1) you are very intelligent and make it your full time job, or 2) make sure everything continues with 'business as usual'. You can also delegate your money to someone else, to meet the first option. However, when there are hiccups in the process, it can be dangerous for any investor.
It is important to also set up a regular savings account for retirement, and most importantly, to avoid debt as much as possible. These two things will stabilize your personal economy more than anything you can do with a stock market based account.
posted by Tyler | 4:40 PM
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