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Americans invest their 401(k)
President Donald Trump has signed an executive order that could dramatically change how Americans invest their 401(k) retirement savings — paving the way for alternative assets like private equity, cryptocurrency, and real estate to be included in workplace retirement plans.
Currently, most 401(k) accounts stick to traditional investments such as stocks, bonds, ETFs, and mutual funds. While private equity and crypto are technically allowed, they’re rarely included due to legal risks, limited accessibility, and high fees. Under Trump’s order, the Department of Labor will review its current guidance within 180 days, while the SEC will explore ways to expand access to alternative investments in retirement accounts.
Potential Benefits for Retirement Investors
Supporters say the move could give everyday Americans a chance to tap into the $12.2 trillion private asset market — previously accessible mainly to institutional and high-net-worth investors. They argue this could help:
Increase portfolio diversification
Open new growth opportunities
Access potentially higher long-term returns
Kenneth Bentsen Jr., CEO of the Securities Industry and Financial Markets Association, called the policy “a step toward democratizing private market access” for retirement savers.
Risks and Concerns for 401(k) Holders
Critics warn that private equity and cryptocurrency come with steep risks, high fees, and limited liquidity. Management fees for private funds can run between 1% and 2%, with some charging performance fees as high as 20%. By comparison, most target-date mutual funds charge around 0.3%.
Financial experts caution that:
Private markets lack transparency and are harder to sell during market downturns.
Crypto remains volatile, with minimal investor protections.
High fees can erode long-term gains.
Anh Tran, managing partner at SageMint Wealth, advises limiting exposure to no more than 5–10% of a portfolio and warns that inexperienced investors could face “potentially irreversible losses.”
Knut Rostad, president of the Institute for the Fiduciary Standard, went further, calling the change a “massive train wreck” waiting to happen, predicting that many 401(k) savers could see their accounts “annihilated” in a market collapse.
What Happens Next
Employers would still need to opt in, and many may be hesitant due to legal liability for investment losses. But with new government guidance, adoption of private market and crypto options in 401(k) plans could accelerate.
Experts say the rollout will take months, but investor education and strict safeguards will be critical. Without them, the risks could outweigh the potential rewards — especially for younger savers and those without access to professional financial advice.
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