After reading about how many points the stock market has lost, and seeing on the news how the collective 'we' have lost tons of money from our retirement accounts; Some people started to wonder, where did the money go?

Its perhaps the #1 difference between a savings account and a retirement/401k/403b/investment account.  Like the fine print in all of these sub-prime mortgage loan documents, it gets presented but not always understood.  No mortgage document was ever signed that didn't contain the words describing the low introductory rate nor the fact that the rate would adjust in the specified number of months resulting in a higher payment of $X,XXX.

With any funds tied to the market, one has to understand that the only real 'money' that got put into the account was their own, or the funds matched by their employer assuming a 401k or similar.  The cash that gets put in is used by the fund managers selected to manage your fund buy into mutual funds that match your stated goals (i.e. income, growth, aggressive growth, and so on).  You own shares, or a portion of whatever a fund or stock is valued at the time of the buy.  The plan is that these shares will increase in value, so when you sell them you'll get back more money than what you put in.

Its only when you sell or cash out that you have actual money again.  Here's an article that appeared on foxnews with further details and descriptions of the 'market' and what it means when it free falls.