00:00With President Trump's executive order allowing 401k plans to include crypto, private equity and real estate,
00:08retirement investing is entering a bold new phase.
00:11As crypto adoption grows, with billions flowing into digital assets and institution increasingly diversifying,
00:19investors are rethinking traditional strategies.
00:22Is this the future of retirement? Planning or a high-risk gamble?
00:26Aaron Tang, Country Manager from Luno, Malaysia, with me on the line right now.
00:32Aaron, thank you so much for being with us today.
00:35First of all, what's your initial reaction to President Trump's executive order allowing 401k investments in crypto and other alternative assets?
00:45Do you see this as a game changer or mainstream adoption or a risky move for average investors?
00:53Good morning, Harit. Thank you for having me again.
00:56It was really, really a pleasant surprise, especially since it came from the federal level.
01:01Because up to this date, several of the U.S. states, they have some of the pension funds has adopted Bitcoin at the state level.
01:08But this one came from President Trump, so it's a federal level thing.
01:11I think it's really a game changer for mainstream adoption.
01:15And, you know, the fact that Bitcoin has come a long way from, I would say, quite a niche asset class to something that is recognized today in retirement portfolios.
01:26That's really a game changer.
01:27I just want to point out one thing on the 401k retirement scheme in the U.S.
01:33That's slightly different to the Malaysian EPF, although there are similarities.
01:38Unlike the EPF where the very, very experienced professionals here locally, they manage the funds for us.
01:44In the 401k in the U.S., they actually give choices for the investors to decide what to invest in.
01:51Yeah. Aaron, from Luno's perspective, how ready is the average investors to include crypto in long-term retirement strategies like 401k?
02:01Are there educational or regulatory gaps that need to be addressed first?
02:08All right. So just going back to what I mentioned earlier, I think in Malaysia, the really defined retirement plans, for example, EPF and so on.
02:17I would say that the portfolios in those retirement funds, that is already decided by the professional fund managers and so on.
02:26Now, that being said, Malaysians, we can choose for ourselves, oh, I want to invest in, say, some stocks, in bonds.
02:33That is my own personal portfolio.
02:35So I think regarding that, it's actually happening already.
02:38So many Malaysians, more than 1 million Malaysians on Luno are already investing in crypto.
02:44Now, some of these probably investing for short-term gains, some maybe medium-income gains, but I'm pretty sure some of them are also investing for their retirement.
02:54Now, in terms of educational regulatory gaps, I think the amazing thing is that financial advisors today, people who have licenses to actually do financial planning and financial advisory,
03:07they are also recognizing and understanding crypto digital assets in investment portfolios today.
03:13So basically, if people need advice on, okay, how much should I be investing in Bitcoin, digital assets, and so on, you can actually reach out to a financial advisor.
03:23And I think financial advisors will actually be able to give you some very, very good pointers.
03:28Aaron, what unique advantage do crypto assets offer that traditional investment like stocks and bonds might lack, especially in the context of long-term wealth building?
03:42The one very, very interesting thing that digital assets, especially Bitcoin, has proven to show that it's actually a very efficient diversifier.
03:52When we talk about investments, we want diversification because we don't want all our investments to move in the same direction.
03:59So, for example, when the market is going up, all our investments go up.
04:03When the market is going down, all our investments go down.
04:05We don't want that.
04:06What we want is diversification.
04:08So, regardless of market conditions, hopefully our portfolio will overall be doing well.
04:14So, I think that's really, really, Bitcoin has proven to be a great diversifier.
04:18And when I say diversifier, I don't mean that people need to invest a huge amount of their portfolio into Bitcoin.
04:24It could be 1%, 3%, 5% of their portfolio into digital assets.
04:30I think the other really, really cool thing about digital assets is they offer 24-7 trading.
04:36They offer almost very, very quick settlement.
04:39So, for example, if I were to sell my digital assets today, I should be able to get my ringgit, Malaysian ringgit back into my bank account within the same business day.
04:49Aaron, maybe can you share examples of data that show how crypto has contributed positively to diversify portfolios in recent years?
05:02Are there specific coins or strategies that stand out?
05:06Sure.
05:07Thanks, Harith.
05:07Would you allow me to share my screen?
05:10I want to pull out some graphics here.
05:12Yeah, sure.
05:13Yeah, okay.
05:14Cool.
05:14Just give me a moment.
05:15Let me just share you some very interesting graphs.
05:19So, I hope you're seeing my graph on the screen here.
05:24All right.
05:25Thanks, Harith.
05:25So, this is a bit of a complex graph, but we'll start right at the bottom here.
05:31I hope you can see my cursor.
05:33So, this is a five-year graph.
05:34This is a five-year graph comparing the performance of three very, very well-known asset classes.
05:40So, from basically 2020 to 2025 August, this graph was taken yesterday.
05:47The top line here, you see the line that's quite dramatic moving up over time and achieving a gain of about 900%.
05:56That's Bitcoin.
05:57That represents Bitcoin.
05:58So, basically, if you had invested RM1,000 into Bitcoin five years ago, today you would have roughly RM10,000.
06:07Now, the two lines down here at the bottom, they represent SPX.
06:12SPX represents the 500 largest stocks in the US.
06:16And then the other line represents gold.
06:17They've done actually very well as well.
06:19So, SPX is up about 90%.
06:22Gold is up about 72%.
06:2372%.
06:24So, if you invested RM1,000 five years ago into the US stock market or gold, you will be up about RM1,800, RM1,700.
06:33Now, the thing to remember is that Bitcoin, it has volatility as well.
06:40You can see that it goes up and it goes down.
06:42But over time, if you look at it on a longer-term asset, you can see that the trend before this has been going up.
06:48Now, I want to caveat this by saying that past performance is never a predictor of, or rather, it's not a predictor of future returns.
06:56We cannot guarantee that this will happen continuously and so on.
07:00I'm just saying that historically, it has proven to be a very, very interesting asset.
07:04Now, I want to move on to my next slide, which hopefully will bring the point further.
07:10So, this is a diagram showing the performance of asset classes every year.
07:18So, for example, if we start at the left-hand side, in 2013, Bitcoin was the best-performing asset class with about a 5,000% gain.
07:27Gold was not doing well in 2013, negative 29%.
07:31And then we have a couple of other asset classes, for example, the U.S. stock market, bonds, and so on.
07:37Now, this graph is actually very interesting because it shows you that Bitcoin has been the top-performing asset class for most years, over the past decade, and so on.
07:47You'll see that Bitcoin, Bitcoin, Bitcoin at the top here.
07:50There were times when Bitcoin had a big drawdown as well, when Bitcoin performed negative 58%, negative 74%.
07:55But you'll see the cumulative return, the analyzed return, they are very, very attractive.
08:00Now, I want to go back to what we mentioned about portfolios.
08:04When we talk about investment portfolios, I think no one who is actually creating portfolios is saying 100% Bitcoin or invest all your money in Bitcoin.
08:14Rather, it's a measured approach to building portfolios.
08:18So, whether that's, again, 1% into digital assets, 3%, 5%, this differs, it varies for different people.
08:25But I think it's safe to say that Bitcoin has established itself as a mainstream digital asset today.
08:32Aaron, maybe you can tell us more.
08:35What are the biggest risks of including crypto in retirement accounts and how can investors mitigate them?
08:44Is volatility the main concern or are there deeper systemic risks?
08:50Yeah, volatility is definitely one of the concerns.
08:54As you can see, the graph goes up, the graph goes down as well.
08:57I think that typically can be mitigated in two main ways.
09:02Number one is to have a size that is comfortable for volatility.
09:06Again, some people that's maybe 3%, maybe that's 5%.
09:09The second thing is to have a longer time frame.
09:12So, I think some people may be very, very excited for short-term games.
09:16But, again, Bitcoin digital assets, we have seen that they are a bit of a longer-term game.
09:23Now, the other thing I want to mention is that some of the early adopters had problems safekeeping their digital assets.
09:30So, maybe if you rewind back about 10 years ago, people were not as careful as storing their digital assets.
09:36We hear horror stories of somebody storing it in their hard drive and then they threw the hard drive away and then today that hard drive is worth like $100 million.
09:45So, I think today the landscape is very, very different.
09:48Today the industry has grown up.
09:50We even have licensed custodians, right?
09:52So, even if you do not want to store the crypto yourself, the digital assets yourself, you can work with a licensed custodian right here in Malaysia.
10:00They can actually store the digital asset for you.
10:02So, safekeeping, I think we are moving definitely in the right direction.
10:06Aaron, I think this is the most and crucial question to you.
10:11How do you respond to critics who argue that crypto is too speculative or unstable for retirement planning?
10:20I just want to say that retirement planning is a very individual thing, right?
10:25For example, let's say somebody in their 60s, somebody in their 70s.
10:30Maybe, maybe digital asset, Bitcoin, is not for them.
10:33I'm just saying maybe.
10:34Maybe, maybe it is for them.
10:36So, I think the main ways to mitigate some of the volatility that I've mentioned is, again, timeframe and also sizing.
10:45I think historically we've seen that having a 1%, 3%, 5% allocation, historically over periods of, say, 3 years, 5 years and so on,
10:54it has actually enhanced the portfolio really, really well.
10:57So, yeah, I think that, you know, there is a, there is an element of volatility that always needs to be recognized.
11:04But there's a quote that I really love.
11:06The quote says that volatility is the price you pay for performance.
11:11Volatility is the price you pay for performance, meaning that if you're looking for bigger gains, most likely you're going to come with higher volatility.
11:19Aaron, in about one minute of our discussion, what does a well-diversified portfolio look like in today's investment landscape,
11:30especially with the inclusion of digital assets?
11:32Yeah, definitely there have been a couple of very, very, I would say very, very well-recognized papers in the industry now showing the benefits of a 1%, a 3%, a 5% digital asset allocation.
11:48And usually they mix it between a traditional 60% stocks, 40% bonds, and they take a few percentage points away from the bond.
11:58So perhaps it becomes something like 60% stocks, 39% bonds, 1% digital assets, or 60% stocks, 35% bonds, 5% digital assets.
12:09Now, again, this is a very, very individual thing.
12:12Everyone will manage their portfolios differently, but the literature out there has shown historically that some of these portfolios that I mentioned have done really well.
12:22Aaron, thank you so much for your time.
12:24Aaron Tang, Country Manager Luno Malaysia.
12:27All of these will be available in our website and also all our social media platform.
12:32Thank you so much, Aaron.
12:34Sekian saja Niaga Awani untuk waktu ini.
12:36Saya Haris Ashraf Aslan.
12:37Kita jumpa lagi.
Comments