Here’s the context. Americans’ retirement plans are governed by a law known as ERISA. It says that companies are obligated to offer retirement options in the best interest of employees, not Wall Street. President Trump signed an executive order saying that these more speculative asset classes like crypto, private equity, and real estate should qualify for inclusion in 401ks under ERISA.

I know we live in very polarizing times, so is this GOOD or BAD?! How should you direct your outrage?!

Well, for me it’s kind of “eh”. The “pro” argument is one of free choice and limited regulation. We can already invest in this stuff inside of a regular brokerage account. Why not let individuals choose from more options inside of their 401ks too? The “con” argument is that many/most 401k participants are very inexperienced investors. Tighter regulations are designed to protect those investors from having so much rope they can hang themselves or get taken advantage of by a less than altruistic financial services industry.

i.e. Imagine a dude named Jeremy who put all his money in Dogecoin and lost it all. Before he might have said “Well, at least I have my 401(k)” (which is obligated to be invested in more reasonable asset classes). In the future, he’ll potentially be able to bet the WHOLE farm on Dogecoin!

Don’t bother looking for it in your 401k today. It’s gonna take a while. At least months for the ERISA guidelines to be updated and maybe years for 401(k) administrators to design and include these new investment options in your plan.

For me, I’ll be passing on the new options. There’s this myth floating around that the more complex or more inaccessible an investment, the hotter it might be. But that’s almost exclusively false. A plain old easily accessible index fund (like a US total market ETF like VTI or a global ETF like VT) will very likely outperform most or all of these alternative asset classes going forward. I’m literally betting all of my money on it.

As always, reminding you to build wealth by following the two PFC rules: 1.) Live below your means and 2.) Invest early and often.

-Jeremy