Money placed in a 401(k) is generally invested in the market. The hypothesis is that retirement money is a primary source of capital for investment banks. Some young people hold the view that this is akin to financing the banks' unethical activity, and refuse to participate.
Of course this is nonsense. One can always keep invest a 401(k) in hard currency or short term treasuries (T-bills.)
> Money placed in a 401(k) is generally invested in the market.
So is money put in a bank. Other than stuffing cash in a mattress, there are very few ways you can save money that don't involve either investing in markets or enabling someone else to do so.
> One can always keep invest a 401(k) in hard currency or short term treasuries (T-bills.)
Using your 401(k) to buy up central-bank issued currency or government securities (both of which financial sector companies also invest in, and increases in other people investing in them increases their returns and gives them more money for their other operations) -- all while still paying a fee to the investment company running the 401(k) -- isn't any less investing in the financial markets and enabling unethical behavior on the part of investment banks than investing your 401(k) in the stock market is .
I agree, it's a foolish stance. It's primarily an excuse not to save, sort of like a homeless man telling you he doesn't own a BMW because they're bad for the environment.
Even stuffing cash into your mattress affects the total amount of dollars in circulation, and thus represents a zero-interest loan to the government.
Similar to people who preach about the evils of fast food hanging out at Chipotle or Starbucks.