More Stocks Than Ever in 401(k)

Today’s Chart of the Day is from The Wall Street Journal, in an article titled “Americans’ 401(k)s Are More Tied to Stocks Than Ever.” The article shares a chart from Vanguard that goes back to 2008, showing that those under age 44 have about 85% of their funds in stocks and those over age 60 have about 60% in stocks.  

Two contributors for the record high:

1. The stock market has done well, increasing an average of 15% a year for the last 15 years.
2. More people are using Target-Date Funds, which generally invest in more stocks than someone who does it on their own.

Is this a good thing? In the short term, yes—as long as investors understand that the stock market is a long-term investment and can handle the ups and downs.