401(k) investment and losses

Question

If banks are certified and backed by the government, then why during financial crisis do people lose out on their retirement investments?

In: 0

Answer 1

Your bank accounts holding your cash (demand deposits) are backed by FDIC, FCUA, etc. So if the bank becomes insolvent, the insurance funds will make you whole again – up toa point.

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Investments such as those found in 401(k) are not insured and can, and do, lose value.