Pros and Cons: Should Everyday Savers Consider Private Equity or Crypto in Retirement Plans?

Core Viewpoint - President Donald Trump's executive order in August 2025 allows 401(k) investors to access alternative assets, raising the question of whether regular savers should consider these options or stick with traditional investments [1] Pros of Alternative Assets - High return potential: Historically, alternative assets tend to outperform traditional investments, with private equity investing in rapidly growing companies and crypto showing the ability to deliver outsized gains in short periods [4] - Diversification: Alternative assets do not move in tandem with traditional markets, potentially smoothing out portfolio volatility during market downturns [4] - Access to institutional-level growth opportunities: Private equity investments provide early access to assets that were previously reserved for institutional investors [4] - Tax-deferred growth: Some alternative assets can grow tax-free in retirement accounts, potentially increasing after-tax returns [4] Cons of Alternative Assets - Higher fees: Alternative investments often come with management and performance fees that are significantly higher than those of traditional investments, necessitating a careful evaluation of fees versus expected returns [5] - Liquidity lockup: Investments in alternative assets can tie up funds for years, complicating access in emergencies due to existing withdrawal restrictions in retirement accounts [5] - Complexity and risk: Alternative assets require complex due diligence and continuous monitoring, which may be challenging for many investors [5] - Volatility: These investments can experience dramatic value swings, complicating portfolio tracking [5]