A new executive order signed by President Trump aims to include alternative assets like cryptocurrency, real estate, and private equity in 401(k) retirement plans. These accounts typically hold stocks and bonds, but the order directs the Department of Labor, Treasury, and Securities and Exchange Commission to clear a path for these alternative assets.
Private equity firms invest in companies or assets, often distressed businesses. Historically, only large institutions and wealthy individuals could afford this investment option. However, with the executive order, private equity might become available to more people.
However, Lisa Kirchenbauer, an expert, notes that while this may be a democratization effort, it doesn’t guarantee better investments for everyone. The quality of these new funds depends on which companies or investments are included, and fees can be high, making them less suitable for many.
Private equity firms charge up to 20% in management fees and investors are locked in for long periods. Jeff Hooke, a finance lecturer, suggests sticking with basic investment options like stock and bond index funds due to the high fees and mediocre track record of private equity investments.
Cryptocurrency is also volatile and loosely regulated, posing risks to investors. However, if you’re willing to take these risks, up to 5-10% of your portfolio could be invested in alternative assets.
The executive order creates new possibilities but also raises concerns about the suitability of these assets for many retirement plans.
Source: https://www.npr.org/2025/08/16/nx-s1-5504096/401k-private-equity-crypto-executive-order