Is IRA & 401K A SCAM?

I saw this 60 minutes documentary on YouTube, apparently a lot of people had lost their entire or most of their life savings 401k. I believe this was back in the 2008 crash or recession. These people where hoping to retire at their age but could not afford to. It was really sad. 😔

I found out In The video that there are fees deducted from your 401k savings & people didnt know about them. I heard that every 10 to 25 years the economy will crash again just like it did in 2008 but this time it will be much much worse. And I don't think that we fully recovered from the 2008 crash I think that we are still in a recession. What do you think?

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  • 6 months ago
    Favorite Answer

    Not sure what you watched?? But I don't use you-tube to make investment decisions. The only people that lost money in the 2008 crash, were those that panic'd out & moved to the safety of money markets.

    The market has been on a tear since the Spring of 2009. My 401k that was 100k in 2008 is 600k now. This is what happens when you stay the course & continue to invest.

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  • zipper
    Lv 6
    6 months ago

    They are not scams, they advance saving programs for when you retire, and save you money on income tax until you start taking the money out of them when you reach old age, which mite make even that money tax free.

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  • Jeff T
    Lv 6
    6 months ago

    It's not a scam, but you have to be careful with it. During the 2008 crash, a lot of investments dropped in value. Most came back up, The fees are specific to the mutual funds you pick, and are disclosed in the fine print. The 2008 recession ended in 2009, but Obama's policies stagnated the economy instead of letting it roar back like it is now.

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  • Anonymous
    6 months ago

    1) I agree there are some crappy 401k plans out there with expensive options. However, people ARE informed of the fees. Most people don't bother to read the fine print or a prospectus and that's on THEM.

    2) IRA and 401k accounts are NOT types of investments. They are accounts that receive specific kinds of tax treatment for whatever investments the investor chooses. They are not "scams".

    3) 401k companies have a fiduciary responsibility to offer a wide range of investment options...everything from a money market account to government guaranteed bonds to high flying tech investments. The employee chooses. It's their responsibility to choose wisely.

    4) No, we are not currently in a recession.

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  • 6 months ago

    I saw this 60 minutes documentary on YouTube

    60 Minutes documentaries ARE NOT on YouTube. Whatever you watch, it wasn't from 60 Minutes, or it wasn't on YouTube.

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  • 6 months ago

    These were probably naïve idiots who used a shady organization or a lousy investment vehicle instead of something legitimate. There are always hucksters selling worthless stuff to the naïve, and many naïve people know nothing about unreasonable fund loads and management fees.

    If you think we are still in a recession, you are pretty dumb - and you have NO business investing in anything. The stock market hit bottom one month after Obama was elected, and it has been in an upwards trajectory ever since.

    The market will go up and down, and the economy will eventually slow down - but this has happened for hundreds of years.

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  • Anonymous
    6 months ago

    We are not in a recession, so you're clueless. The economy recovered to pre-recession (2007) levels between late 2012 and May 2014. Those that lost all their 401K savings did so because they pulled all their money out while the market was low, which is a stupid idea.

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  • 6 months ago

    I did not see that 60 minutes but, neither are scams and it did not and does not happen like you said. Yes, the market crashed in 2007 and our 401k investments, etc. crashed but you have to realize that the increases were exceptional for many years. The market always recovers. Depending on where you put your money, the investments can recover fairly quickly or very slowly. People who expected to retire on just market investments were foolish. They invested contrary to the number 1 rule in investing - Diversify. Diversity is not just "different" stocks or mutual funds. If they were expecting to retire, they should have been properly diversified. They may have lost most of their savings but it was only a paper loss and it was their decision to invest where and how they did. The fees are puny - always covered by the increase in the investment.

    Source(s): Generations and decades of knowledge.
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  • 6 months ago

    First...read a book or even the news...we have not been in a recession in years. Second, the market is at its highest level ever. Yes, some people did lose lots of money - but those that followed a sound strategy of buy an dhold are now way much better than those who tried to time the market or chase the market. Yes, some funds charge fees - they have to declare all these fees which is why a simple and cheap strategy is to buy no load or low load finds that mirror a market (we have one fantastic with our SPY fund).

    As a=for a future crash, it is not inevitable. Expect,however, market corrections from time to time that will drop the broad market 5 - 10%. If history tells us anything, these corrections are short-lived and the only people that get hurt are the ones that panic and sell. In reality, the best time to buy is during a market correction since stock prices are down and you can ride the stock back up when the market corrects up as it always has. The 401(k) and IRA itself is not a scam - they are solid places to put retiorement funds. The problem is not the plan itself, but where the investor chooses to invest his or her money. Two people can have the same amount of money in an IRA on teh same day 10 years later, one could have tripled his money and the other could have just tread water...same IRA, different results because the investors chose the internal investments differently.

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  • 6 months ago

    No.

    We fully recovered from the 2008 crash while Obama was still President, and we've gone up a little more since then, although not as much as we did when Obama was President.

    There are some fees on a 401K, but they aren't very much and the participants are told.

    You can decide how to invest your 401K or IRA and you don't have to be vulnerable to crashes. You can choose to put it into stable value funds or money market funds so that you don't lose value when the market crashes.

    Even in the 2008 crash, the market only lost a little more than half its value -- and more than made it back remarkably quickly.

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