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Originally posted by Adder
As I keep saying, it need not bounce back in a year.
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Spoken like a true 25-year old. You'd be a lot less sanguine if you were 70 and lost 30% of the money you depended on to provide a bare minimum of support.
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I believe that nearly everyone, given no choice but to save, will be able to do so without losing it all. Why? Becaues nearly everyone who has enough money to be able to save does so.
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Cite, please. Most people in this country perform miserably in saving money, and most have no experience in managing their own money. Why else is the US savings rate so low, and personal debt rate so high? Why have personal BKs increased even in times of prosperity? How many people lost their life savings in company 401ks when the company went bust, after ignoring the most basic advice about diversification?
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The bigger risk is that most people will not take enough risk and therefore not get the full benefit of their freedom. I think you strongly underestimate people's level of discomfort with investment risk - most people will opt for gauranteed (miniscule)returns.
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In which case, what's the point? The point of this change is not to give a bunch of lawyers another $4000 to invest each year. It's supposed to be a systemic change that will bring about vastly higher returns.
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Yes, I have faith in the magic of the market. I believe that average returns over the next 40 years will be roughly similar (plus or minus a few points) to what they were over the last 100 years. Do you have some apocolyptic knowledge that the rest of us don't have?
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Interesting -- you agree with me that this is a fundamentally different situation, yet you assume that past performance guarantees future results.
Over time the market has performed well. It has not been a good guarantor of a safety net, though. And average returns over time are just that -- average returns over time. Your faith in the market assumes that everyone will perform at average. Maybe in Lake Wobegon....
