sc94597 said:
When most of these new assets cannot be taken out until 30-50 years from now (you are not allowed to touch it until retirement) how exactly would the boom, bust? Nobody will stop investing or remove their assets out of fear, because they can't. They'll just move it to other assets, if they are afraid. By the time people can collect, the stock market would have grown large enough to accomodate, assuming no interim disasters. This is also especially true if we consider that the diversification of assets wouldn't make any single investment more popular than any another. Also if it is done gradually (slow decrease in social security and slow increase in personal account mandates this would also not be an issue.) It would have to be done gradually anyway, because there are people already invested in the social security system. Social security would likely still exist, but mostly for the poor and disabled. Sure, any circumstance in which resources are being allocated unoptimally will lead to a bubble, but some bubbles are much worse than others. And this one is at least predictable. This would be much less endangering to the stock market than the poor manipulation of interest rates by the FED anyway. |
Agreed.
Whilst I again stress that you can choose to invest in anything that meets the 'one purpose' rule, most people are with funds. As a young adult, it is generally recommended that I have a higher proportion of my wealth in moderate risk investments, and a small amount in high risk investments. If I were too lose money, I would retain ~30 years in which to rebuild my wealth.
If I was 50, it would be recommended that the majority of my wealth be in small risk, small return investments.
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