401K Plan and Fixed Investment

July. 06,2020
401K Plan and Fixed Investment

What is the 401K plan?

The 401k plan starts in the early 1980s, is a fully funded retirement insurance system implemented by employees and employers. Rapid development in the 1990s, gradually replaced the traditional social security system, becoming the United States many employers preferred the social security plan. For for-profit private companies. 401K Plan is one of America's pension plans.


Enterprises set up a special 401 (k) account for employees, employees from their salaries each month to take a certain proportion of the deposit into the 401 (k) account, and the enterprise also according to a certain proportion of funds into this account. (like provident fund)


On average, there are more than 20 funds to choose from in each 401 (k) plan, including equity funds, bond funds, index funds, money funds, etc., and employees choose to invest in the funds they offer. When you retire, you can choose to withdraw your money in one-time or in installments.


The 401K plan looks much like a fixed-shot.


Fixed investment can be old-age. 401K plan can choose different fund categories to invest, more than 70% of the 2000 years are stock-based, the dotcom bubble burst in 2000 and the 2008 financial crisis after the share of equity funds decreased, but the stock-type and foreign stock funds accounted for 60% of the total, the size of hybrid funds rapidly increased. The 401K program began to place more emphasis on diversification, but the share of bond and money funds has been low.


Have you found out that while many people are still struggling with whether or not to make a fixed investment, hundreds of millions of people in lighthouse countries are already using fixed investments to prepare their pensions.


Since the main investment is in the stock market, there is the same risk of loss in a bear market. The 401K program can only be retired, so the bull market makes money, but the bear market's losses are also not run away. In 2001, when the market was bad, it was as big a loss. Lighthouse people will also vomit spit


But in the long run, the return on equity investment is the highest. At the end of 1990, it closed at 330 points, with the latest level at 2832 points, a compound growth rate of 8%. In particular, 10 years of earnings from a long bull market and a 401K plan.


Fixed investment suitable for A-shares


401K program because can not actively exit, so regardless of the bull and bear up and down, are silently bear. There is no liquidity limit on the investment, and the A-share bull market is short and violent, the bull market high bubble is obvious, can be timely redemption locked profits. A-share bear market time is long, in the bear market and there is plenty of time to open positions, so the fixed investment is perfectly suitable for A-share investment