Does an IRA lose money like my 401(k) does?
An IRA and 401(k) are simply a vehicle created by the government to designate those accounts as special tax benefits provided. If the IRA is invested in stocks, bonds, mutual funds or most other investment vehicles you can certainly lose money. You should consult a qualified financial advisor for advice.
All investment accounts can gain or lose money if they are invested in the market. If you have stocks, bonds, or mutual funds holding stocks and/or bonds in both accounts, they both are subject to gains and losses.
They can perform exactly alike, if they are invested exactly alike. One doesn’t guarantee a different return from the other. IRA and 401k are only the names of the account wrappers, the inside investments dictate loss or gains over time.
IRAs and 401(k)s are simply types of accounts. You make certain investments within those accounts, and it is the investments themselves that either increase or decrease in value. The type of account the investment is unrelated to the quality of the investment itself.
Think of the IRA and 401(k) as different types of wrapping paper and your investments as the gift. If your investment (the gift) is a fruitcake, it doesn't matter what kind of wrapping paper you use - you still have a fruitcake.
It can. An IRA, like a 401(k) is a “basket” that holds investments. If you invest in a Savings Account in an IRA then you shouldn’t lose money (but you could lose purchasing power). If on the other hand you invest in stocks or stock mutual funds then you certainly could lose money.