Retirement funds can also invest in crypto

The White House is brewing a new move: 401(k) retirement accounts may soon open up for investment in cryptocurrencies, private equity, hedge funds, and other alternative assets.

If this event comes to fruition, who will benefit the most?

Of course, it will be the alternative asset giants who have long been waiting at the door. Big players like Blackstone, KKR, and Apollo have already run through asset management and liquidity solutions; they were just waiting for a policy opening. And now, the opening has been made, and the flow has begun.

So besides these big players, can ordinary folks benefit?

Let's first look at a set of data,

The standard retirement portfolio (60% stocks + 40% bonds) recorded its worst annual return in 14 years in 2022, dropping over 15%.

During the same period, some large hedge funds earned over 20%, and Bitcoin even nearly doubled from its bottom in 2023.

The conclusion is quite straightforward: Traditional allocations are indeed becoming increasingly difficult in a high-inflation and highly volatile environment.

This type of asset may seem like a roller coaster in the short term, but over time, it can help cushion losses and pull in returns, offering an added layer of resilience compared to traditional investments that only rise a little and fall alongside.

Of course, this doesn't mean everyone should go all-in on crypto. The key lies in having choices.

It is important to allow ordinary people to also encounter such assets, rather than forever being limited to buying large-cap ETFs.

Fidelity began testing the inclusion of Bitcoin in 401(k) investment options as early as 2022. Grayscale has also repeatedly lobbied for the opening of DC plans to support crypto allocations.

Now, even the government is preparing to nod, indicating that the trend is irreversible.