Executive Order on Alternative Investments
In a significant move, President Trump has authorized an executive order that opens the door for workplace retirement plans to include a range of alternative investments such as private equity, cryptocurrency, and real estate. While this expansion may seem enticing due to the potential for higher returns, various investor advocacy organizations have raised alarms about the associated risks, particularly for those saving for retirement over the long haul.
Expert Opinions on Retirement Security
Jerry Schlichter, a prominent attorney and founding partner at Schlichter Bogard, a firm that tackles high-fee litigation in 401(k) plans, emphasized the primary aim for everyday individuals: securing a stable retirement. He cautioned that investments like cryptocurrency and private equity carry unique and substantial risks that could jeopardize this objective.
Investment Recommendations
Investment professionals generally recommend that retirement portfolios lean towards diversified assets, which tend to yield steady returns over extended periods—ideally spanning several decades. In this regard, Schlichter supports the idea that broad-based stock index funds are a prudent choice for retirement accounts, especially given the consistent upward trajectory of the stock market.
The Challenges of Cryptocurrency
Cryptocurrency’s landscape presents its own challenges. Although some digital currencies have experienced remarkable gains, their relatively brief existence means their security is not yet proven.
“Cryptocurrency lacks a long-term performance history, and its short- to medium-term performance is highly volatile,”
Schlichter remarked, advising that individuals unfamiliar with this type of investment should exercise caution and avoid incorporating it into their retirement savings.
