Insidious? That’s a bit rich. You can allocate money in your 401k however you want. It’s self-directed. If you don’t like stocks keep it in bonds or cash.
This is disingenuous advice considering all financial vehicles for savers have been gutted. You can't even hedge inflation without the stock market (or real estate, if you can afford the buy-in).
Take a look at some historical CD rates. https://www.bankrate.com/banking/cds/historical-cd-interest-...
When you say "all financial vehicles for savers", you're really just referring to liquid savings products tied to the federal funds rate, right? Of course when the government stops handing out money to savings account holders, savings account holders will no longer be making money.
Corporate bonds are an alternative way to earn some interest in a low-rate environment without owning stocks.
Also, REITs are an affordable way to gain exposure to real estate without a minimum buy-in. For people who need real estate exposure but can't afford to buy a whole building, they are really underrated.
Finally, the market is pricing in several rate hikes this year, so your savings account interest rate may actually be revived soon anyways.
I've been watching the rate hikes. The cynic in me says borrowing rates will rise, but consumer savings rates will not rise in step, nor will housing prices fall accordingly. But I guess we'll see.
I agree that it would be great to add more simple savings products, but you have to ask the question of where the yield will come from. If yields don't come from the fed (dictating inter-bank lending rates), and they don't come from the private sector (wall st), then where else can yields come from? What novel yield stream could a new savings product be built on?
At the end of the day, people wake up and go to their jobs to produce things, and every penny you earn in value in a savings account (past inflation) has to ultimately come from them, but not until it filters through the wall st machine.
If this is driven by demographics, e.g. old people saving for retirement while there are no young people willing to provide for them when they are old, then really the problem isn't the fact that the bank doesn't want to lie to you any longer (the bank is currently lying btw), it's the fact that nobody will be there to take care of you.
See also: treasury inflation-protected securities (TIPS).
Second, go compare the past year of VIPSX vs inflation you'll see that VIPSX is shit. Inflation has steadily increased by 5%, but VIPSX has been all over the place (it was actually down 2% last month) and is currently only up 1%. This is, again, not what normal people need.
1. There's no way to hedge against inflation (you didn't know TIPS existed)
2. Having learned about TIPS you assert they're illiquid and can't be traded easily (you didn't know about TIPS funds)
3. Having learnt about TIPS funds you don't the recent returns of a specific fund (you don't know that TIPS adjustments lag reported inflation numbers)
And your assertion that TIPS funds lags inflation doesn't hold water. Again, go compare the past year of inflation vs VIPSX. They don't track. By simply being a market traded product, a TIPS fund has speculation built into the price. Which, I'm arguing, is against the best interest of the average person just trying to save for their future.
It’s not advice. It’s reality. You don’t need to hold stocks in your 401k if you don’t want to. What happens as a result is your responsibility.
> According to the Profit Sharing Council of America (PSCA), up to 77% of 401K plans include a provision for in-service 401K rollovers. Many of these only allow plan rollovers when a worker reaches a triggering event such as reaching retirement age, disability, plan termination or reaching the age of 59 ½ years.
So even many of those who are in the 77% who have in-service rollovers available don't qualify for them.