00:00U.S. President Donald Trump has signed an executive order that allows employees to invest in private
00:05assets through their 401k retirement plans. What does this move mean for how you should
00:10manage your retirement savings? Here's what you need to know. The industry has argued that opening
00:14401ks to private assets would give ordinary retirement savers access to bigger returns
00:19and more investment options. To give you some numbers, BlackRock recently estimated that adding
00:24private market assets could bump up returns by about 50 basis points a year and lead to
00:2915% more money in a 401k plan over 40 years. While generating higher returns is important,
00:36you should note that financial experts caution that the potential of higher returns can also
00:40come with downsides. First off, private equity's entrance into retirement accounts could push
00:46costs higher for investors. Another concern is that private assets tend to be less liquid
00:51than the publicly listed stocks and bonds found in a typical employer-sponsored retirement plan.
00:56This means it could be harder for Americans to take out money from their plans before retirement
01:01should they need to access their savings quickly. Finally, there is greater risk involved. Advisors
01:06point out that it is often harder to assess and value private assets because there is less
01:10information publicly available.
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