Commentary: Trump wants you to invest your 401(k) in crypto and private equity. Should you bite?
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If you believe Labor Secretary Lori Chavez-DeRemer, American 401(k) accounts are about to get much better.Thanks to President Trump’s “bold new vision of a new golden age for America,” Chavez-DeRemer wrote in the Wall Street Journal on March 30, her agency is taking steps to open these crucial retirement accounts to a raft of new investment options, such as cryptocurrencies and private equity funds.
Her goal, she wrote, is to “unwind regulatory overreach and litigation abuse that have stifled innovation.” Her instrument is a proposed regulation that in effect would provide a safe harbor for plan sponsors — that is, employers — to offer those options in their employees’ plans without risking lawsuits or government scrutiny over whether they’re sufficiently prudent for workers to choose.We have seen a number of proposals from private equity funds where the returns are really not calculated in a manner that I would regard as honest.— Warren Buffett (2019)Notwithstanding Chavez-DeRemer’s assertion that this change would be all to the good for workers, the truth is that she and Trump are acting at the behest of alternative investment promoters, who have long slavered for access to the nearly $14 trillion in assets held in 401(k)s and other such defined contribution retirement plans.Far be it for me to offer anyone investment advice.
But there are a few things that Trump and DeRemer aren’t telling you about these proposed new options.Namely, the dangers they present to unwary small investors.
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