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Average 401k soared 466% over past 10 yrs

Fidelity’s latest quarterly retirement savings update had something special to celebrate the 10-year anniversary of “the bottom.”

Keep buying...


  • @johnN: I be interested in knowing what the % of rise from just before The market started to TANK !!
    S&P 500 Jan1 2000 = 1499
    S&P 500 July 1 2007 = 1527
    S&P 500 April 1 2009 = 919
    S&P 500 Recently = 2856

    Close to doubling !
    Have a nice day,Derf
  • edited May 16
    This 466% number includes the additional contributions people have made into these plans over the past decade. Without that inclusion the gains in value would have been lower. I’m wondering, too, if it includes self-directed 401Ks which provide a tax haven to the very rich and have much higher contribution limits. These would have grown disproportionately to the 401Ks most wage earners have.

    I think more needs to be done here to try and differentiate how much of this increased wealth went to the small investor (typically working a 9-5 shift) and how much of it actually reflects gains at the upper end of the income level (perhaps the top 10 or 20% of the population). I fear digging deeper might only serve to demonstrate the growing wealth disparity among the population over the past decade.

    All that said ... the domestic equity markets are up something like 300-400% since the bottom almost exactly 10 years ago, March 9, 2009. (Seems to me the DJI got close to 6500.) So, assuming all participants remained 100% in equities in their 401 K plans, the numbers have a semblance of reality. I doubt that’s the case however. Most diversify. Some borrow from plans. Some types of investments lag the S&P, etc.

    @Derf - Good question. Here’s some crude calculations (from a non-math guy): Broad U.S equity markets fell around 50% during the bear market (‘07-‘09). So I’ll start by cutting in half a $100 401K balance. That leaves $50 by the time the bear ended. Than I’ll multiply the remaining balance by 466% to reflect its growth over the next decade. That results in a gain of 233% on the original investment (including new contributions) from just before the crash to roughly the present (a 12 year period). The resultant average gain in value is 19%.( But with compounding factored in it would be less.)
  • edited May 16
    Reviewing chart activity just before the big melt in Sept., 2008 and related to @Derf and the question of "just before" the sell off; I've placed a few investments in the below linked chart. And @hank for your review.
    For the most part the overall U.S. equity sectors were flat for July and August of 2008; and the logic for the starting point.
    From the chart, I will place the rounded total return values; and to note that these numbers reflect a buy and hold with whatever dollar amount was invested on Aug. 13, 2008. These numbers include distributions (dividends, cap. gains).

    --- QQQ = 319%
    --- FSPHX = 314%
    --- FDGRX = 272%
    --- VPMCX = 214%
    --- FCNTX = 203%
    --- SPY = 174%

    A few selected, widely held funds chart Aug. 12, 2008 to date
  • edited May 16
    @Catch, Why did you start in August 2008? The market peaked 10 months earlier in October 2007 with the S&P near 1600.
    I think @Derf was wondering how 401K balances might have fared from that point to today - rather than the skewed numbers Fidelity used (starting at the bottom of the market cycle).

    However, adding the returns you cite for 6 funds and dividing by 6 gets an average gain of +249% - just a tad higher than my earlier crude estimate. If you backtrack those to October 2007 it should be pretty close. Thanks for the work.
  • edited May 16
    Yes, I think that @Derf's point is a good one. If the idea is to consider market behavior over a longish period of time ("Average 401k soared 466% over past 10 yrs") why would you deliberately start from a cyclical low?
  • @hank
    Chart per Derf's statement of: " I be interested in knowing what the % of rise from just before The market started to TANK !!"
    To the dentist, but will do another chart later.
    AND YES, October 2007 was the general high prior to the melt.
    Our personal portfolios combined obtained their highest dollar value on Halloween of 2007. October 31.
  • Forgive me but I don't even believe the numbers. Also, in these cases I think we should be looking at the median and not average.

    "Statistics are like a bikini. What they reveal is interesting, but what they conceal are vital" - Aaron Levenstein.
  • @Derf @hank
    If one plucked down "x" dollars, buy and hold on Oct. 30, 2007; the below percentages are total return for the period through May 16, 2019.

    Same chart layout as last post, but with a start date of Oct. 30, 2007; which is very close to multiple equity market tops before the big melt of Sept., 2008.

    Total returns for this period, buy and hold.

    --- QQQ = 278%
    --- FSPHX = 276%
    --- FDGRX = 228%
    --- VPMCX = 198%
    --- FCNTX = 168%
    --- SPY = 138%

    Another observation. Same funds chart, but from Oct. 30, 2007 to Jan. 2013.
    Imagine an investor deciding to invest $100,00 on Oct. 30, 2007, and vowed to be brave and bold enough to ride the equity markets through 2020, when some of the money would aid in retirement.
    They sweat a bit as they find their portfolio value dip going into the end of 2007. But, about half way into 2008, things are looking better. Then early September tests their braveness, to be further tested into the end of the year and the spring of 2009. Going into the end of March, 2009, the worst appears to be past. The equity markets move along and slightly upward through the rest of 2009, 2010 and then the middle of 2011 finds another portfolio whack as the credit rating of the U.S. is downgraded. Eventually, a bit more positive travel for the remainder of 2011 and 2012.
    However, take a peek at the returns after a little more than 5 years.
    I suspect these are the types of experiences that find folks leaving equity investing and not returning.
    Five years can be a very long time to watch one's money travel such a path.

    Chart here

    Have a good remainder,
  • Thanks for the update @Catch22
  • The average 401(k) employee contribution in the first quarter of the year reached a record $2,370, a 15% increase from a year earlier. The average match was $1,780, a 6% increase from one year earlier.
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