Current Events > I don't fully understand 401ks

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Yes, I understand what it is and it's purpose, but the inner workings have me confused.

For example let's say my vested balance says 10k.. per my calculations that would only be the money Ive put in+ company matches. I dont think it reflects Dividends or actual stock growth? Isnt that the whole point? Amass a bigger amount every year so they grow exponentially?

The investments where my money goes into all have shown big growth, but the balance remains the same (just adding up contribution+matches)? Also when the pandemic started and the stocks took a hit it also reflected no change. How does this actually works and how/when will I see my real balance?

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Your dividends should be reinvested, I don't see how your balance could stay the same

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BignutzisBack posted...

Your dividends should be reinvested, I don't see how your balance could stay the same

Yes, they are automatically reinvested from what I can see. I guess my point is that the stock growth or loss is not reflected in the balance shown.

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401k is just an account, its not an investment. you hold investments inside of it, just like any other account (IRA, 529, HSA, taxable brokerage account), it is not an investment in and of itself. from what you have said, it sounds like you dont have this money invested, it is probably sitting in a cash equivalent or stable value fund, which is not where you want it to be.

you are always 100% vested in any money you put in, plus the growth associated with that money. any company match money (and the corresponding growth associated with that money) is held in a separate sub account from your contributions, and may be subject to vesting rules.


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