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Comment by pantulis | Hacker News Reader

Not a US citizen, but aren't the retirement funds managed by someone who should be held responsible for not diversifying?

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Retirement funds do pretty OK here. Early in your career you'll mostly hold something like an S&P 500 index fund or a total stock market fund, as you get closer to retirement they shift the allocation towards safer investments.

I don't love this; the total stock market is a lot of tech companies, and I already have plenty of exposure to tech by working in the field. It's a good heuristic for most people, though. (And no, I don't do anything about this underlying fear of tech sector exposure. I just buy the Target Date 20XX funds like everyone else.)

My only point is that the grandparent comment generally expects companies to die when they get into the S&P 500. If that's true, we're all screwed. If one S&P 500 is just stealing business from some other S&P 500 company, though, it's probably a net gain. But if it's some privately owned startup, then it's not as concrete a win, and let's be honest, startups are driving a lot of the innovation in tech.

Which retirement funds are doing ok this time around? They typically switch to bonds which thanks to inflation are down something like 20 percent in the last year (some more like 30), despite yielding far less than stocks in the best of times.

It's the right strategy in general, not a strategy guaranteed to never lose money. Your savings account is down 20% year over year in terms of purchasing power because what $1 is changed dramatically. Rare event, and sometimes you're just screwed.

If I had a time machine, I would definitely use it to time the market!

People who are retired, and have absolutely no way to bounce back if the market is unkind, should absolutely invest in places that never lose money. I'm not talking about inflation. I can go out and buy actual guaranteed bonds that pay me an actual guaranteed positive interest rate. Yeah they don't keep up with inflation, but it only a small trickle in lost earning power at that point, not a loss of 1/5 of the number of years I can stay retired which the funds are delivering.

My savings account is not what I'm talking about. Inflation or not, it is still a number I can describe as "positive".

I'm referring to bonds that retirement and wealth management add to funds use to supposedly counter volatility. These are investments that at best will only pay single digits. They have suffered the worst year since 1931 or something. And we're just getting going. The frustrating part is as I said, the underlying bonds themselves still pay that 4% or so which would be much better than the funds are achieving. But for some reason they have to sell the bonds at a loss.

> the retirement funds managed by someone who should be held responsible for not diversifying?

fund managers don't have "personal" or "corporate" assets that are anywhere near the scale of the (retirement) funds they manage; being held responsible for mismanagement would not lead to a source of capital to replace that which had been lost through mismanagement.

All investment has risk.

In the US usually the employee usually has a choice of several funds in their 401 (k) retirement account, including international funds.

It seems the person upthread owns a target date fund and this means they probably are diversified. Their post doesn't make a lick of sense.

If this is referring to me, then perhaps you're confused because I was responding to a question about rewards and punishments not whether labels fit. And I never claimed the the question and my response were somehow opposite ends of a dichotomy. Indeed the connection there is the problem. A fund can be completely diverse and still high-risk.

I was not referring to you. I was referring to the person who wrote this over the top, inaccurate comment:

"When S&P 500 companies fail, your retirement savings become worthless. (Apple is really the one you want to watch out for, though!)"

Whether or not they're ``held responsible'' to the degree anyone in such a position in the US is (i.e. lolno), grocery stores and retirement homes do not accept epicaricacy as payment.

Nope! They're rewarded for getting slightly higher returns than other funds during the bull market times, despite the disproportionate increase in risk they take on to do it. Everyone is looking at recent trends and almost no one looks tat fundamentals. It's a moral hazard.

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