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Comment by brokencode | Hacker News Reader

With most 401k plans, you can choose what you invest in to an extent. You can put it in bonds or other investments if you want.

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This doesnt fix the systemic issue. Most people put their money in a target fund and leave it alone. Those target funds are at risk of being forced to buy these over-inflated assets. The incentive to do this is there because those target funds and naive investors exist.

> Those target funds are at risk of being forced to buy these over-inflated assets

Target funds are diversely managed. This isn’t a real concern.

The diverse investment is the reason that funds will be forced to buy these worthless stocks. It's a direct transfer of money from the working class to the extreme capital class.

If you're good with that, I'll send you my PayPal so you can get me my 5 bucks. It's a tiny fraction of your overall cash flow, whats the big deal?

True, that’s an argument against the typical passive, broad market, market cap weighted fund like VTI or SPY.

But there are many funds that have different strategies, both passive and active. Such as by investing based on value, quality, dividends, etc.

I get that the average person doesn’t know this, but the 401k doesn’t inherently force somebody into broad market funds.

When you destroy pensions by crushing organized labor, create 401k incentives, and place your new captive audience by default into a certain investment class, a whole lot of people are going to leave it there. Whether the provider forces anyone to do anything is irrelevant, it creates second order impacts that ultimately lead to what is perhaps the greatest attempted fleecing in market history

Pensions also invest in stocks, though the difference is that pensioners have no control at all. Of course, they also have guarantees of a certain level of income.

I think the main problem with the 401k is that not enough people actually contribute to one. Or they don’t put in enough.

But I very much doubt the average person who’d invested enough over several decades in a 401k feels like they got fleeced.

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