The Average 401(k) Investor Is Now Richer Than They Were Before the Crash!

According to a new story by the Associated Press, Vanguard, the nation's premier provider of mutual funds and 401(k) accounts, shows that the customers that did the following three things now have more money in their account than they did before the crash:

• Continued to maintain their regular contributions
• Took advantage of employer matching on 401(k) balances
• Reinvested all of their dividends

It all comes down to what I've told you hundreds, perhaps even thousands, of times: When you combine dollar cost averaging with reinvested dividends and employer matching, the results are far better than the stock charts appear.  You can always tell when someone doesn't know basic finance when they see a chart of the market that goes from 14,000 to 6,000 then back to 10,000 and assume people are still down 4,000 points.  Not when you factor in dividends, dollar cost averaging, and employer matching.  You are likely better off because of your lower cost basis. Almost everyone who falls into this camp has an ulterior motive, such as pushing gold or real estate as an investment (both are very good investments, as a matter of fact, under certain circumstances.  But only fools think they are always, in all circumstances, superior to retirement plans.)  In fact, I felt so passionately about this that a long time ago, I wrote an article called The #1 Secret for Recovering from Big Market Losses.

So: It's official.  Those who did the right things are now better off than before the crash.  I'm sure some corners of the population are going to complain about how the rich keep getting richer, but this is the same, boring advice that has been taught for time eternal.  Most people simply assume that something so boring, and so simple, can't be that powerful.  It's a huge mistake to make.  I hope you aren't one of those people.