The Trump administration has signed an executive order clearing the way for Americans to invest their retirement savings in private equity, cryptocurrency, real estate, and other alternative assets. This move is expected to expand access to $12.2 trillion in Americans’ 401(k) and related retirement plans.
Financial managers will have greater flexibility to offer these alternative investments, which can be more lucrative but also come with higher risks. Critics warn that lack of transparency and liquidity in private markets may put people at risk of losing a significant portion of their retirement savings.
Fees for private assets are typically higher than those for traditional 401(k) investments. The Securities and Exchange Commission is now being asked to facilitate access to alternative assets for plans like 401(k)s.
Experts caution that this change could be detrimental to less-informed investors who may not fully understand the risks involved. To mitigate this risk, education and safeguards are crucial, particularly for younger investors and those without professional financial advice.
Source: https://www.nbcnews.com/business/personal-finance/trump-401k-changes-what-to-know-rcna223615