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In August, President Donald Trump(1) signed an executive order opening the door to include certain “alternative assets” such as private credit, private equity and cryptocurrencies in 401(k) plans, expanding the assets Americans can hold in 401(k) plans and other tax-advantaged retirement accounts.
Supporters of the move say the shift could democratize investment opportunities traditionally reserved for institutions and the wealthy. However, critics warn that these assets carry complex risks that ordinary investors may not properly understand.
Here’s how the Executive Order is changing America’s retirement landscape and how you can protect your own portfolio from unnecessary risk.
According to the SEC, some alternative assets, such as private equity and hedge funds, have traditionally been restricted to “accredited investors” with net worth in excess of $1 million (excluding primary residence) or annual income in excess of $200,000 (2).
However, the alternative asset landscape has changed over the years, with retail investors showing increasing interest in these investments. A survey by market research firm Opinium found that 21% of retail investors have considered alternative assets and a further 5% plan to invest in them(3).
The most common reason is diversification. Many investors are looking beyond traditional stocks and bonds in pursuit of higher returns.
Some advisors even say that the traditional 60/40 mix of stocks and bonds should be modified to 50/30/20, with 20% being alternative assets. The idea is that alternative assets can provide a bit of protection against market turbulence, whereas stocks and bonds may be more vulnerable to market turmoil.
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For example, gold is often viewed as an alternative asset that can provide greater stability to your portfolio if stocks are unstable. The precious metal is also in the midst of a historic bull run, with spot prices hitting a high of around $4,300 per ounce in October (4).
With Thor Metals’ Gold IRA, you invest directly in physical precious metals like gold instead of stocks and bonds.
A gold IRA helps investors hold physical gold or gold-related assets in a retirement account, combining the tax advantages of an IRA with the protective benefits of investing in gold. This could become an attractive option for those looking to hedge their retirement funds against economic uncertainty.
To learn more, you can get a free information guide with details on how to get up to $20,000 in free metal with qualifying purchases.
Another popular alternative asset is real estate. But you don’t have to buy a property outright to benefit from the real estate market.
One option is to get into this market by investing in shares of vacation homes or rental properties through Arrived.
Backed by world-class investors including Jeff Bezos, Arrived allows you to invest in shares of vacation and rental properties and earn a passive income stream without the additional work of being a landlord of your own rental property. That means no leaky faucets, burst pipes, or middle-of-the-night service calls.
Start by browsing their selection of vetted properties, each chosen based on their potential appreciation and income-generating capabilities. Once you select a property, you can start investing with as little as $100, potentially earning quarterly dividends.
If investing in real estate through leasing doesn’t interest you, another alternative asset avenue is commercial real estate. For years, direct access to the $22.5 trillion commercial real estate industry was limited to a select, elite group of investors—until now.
First National Realty Partners (FNRP) allows accredited investors to diversify their portfolios through grocery store-focused commercial properties without the responsibilities of a landlord.
With a minimum investment of $50,000, investors can own a share of properties leased by national brands such as Whole Foods, Kroger and Walmart that provide essentials to their communities. Thanks to triple net leases, accredited investors are able to invest in these properties without having to worry about tenant costs impacting their potential returns.
Just answer a few questions – including how much you want to invest – to start browsing their full list of available properties.
Private market funds, which pool investors’ money into assets that are not publicly traded on a stock exchange, are another alternative asset class. Private market funds often tout higher return potential than traditional stocks and bonds, but in practice, these lofty goals can mask high fees, limited liquidity and inconsistent performance.
As of May 2025, only two of the 14 private equity and venture capital funds tracked by Morningstar have outperformed the S&P 500 since inception(5). Meanwhile, according to Hamilton Lane, typical private equity fees include annual management fees of 1% to 2.5%, and performance fees of 20% or more (6). This means that as your portfolio grows, if it does grow, you have to pay more.
Unlike public markets, private assets lack deep secondary markets, making it difficult to exit investments.
“If you want to get out of private equity, there’s no way to actually sell the company or sell the stock because there’s just no market,” Charles Rotblut, vice president of the American Association of Individual Investors, told CNBC.
The risks of alternative assets extend beyond their impact on an individual portfolio. A report from the Economic Policy Institute warns that widespread retail exposure to illiquid and opaque assets could create a “systemic risk machine” that increases the likelihood of financial instability in future recessions (8).
Sticking with low-cost index funds remains a smart strategy for most investors. However, if you’re keen to explore private assets, it’s worth consulting a financial advisor to ensure they fit in with your overall financial plan.
Lisa Kirchenbauer, founding partner and senior advisor at Omega Wealth Management, told NPR (9) that it’s wise to allocate a small portion of your portfolio (roughly 5% to 10%) to these asset classes.
This can give you a bit of market resilience without being overly exposed to illiquidity.
For more personalized advice on whether alternative assets are right for you, try the Advisor.com team. They can connect you with a financial advisor in your area that suits your needs. All of their advisors are pre-vetted fiduciaries, which means they are legally obligated to act in your best interests.
Once you enter your zip code to find financial professionals near you, you can make a toll-free, no-hire number to make sure they’re the right fit for you.
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White House (1); SEC (2); Opium (3); APMEX (4); Morningstar (5); Hamilton Lane (6); CNBC (7); SIEPR (8); National Public Radio (9)
This article provides information only and should not be considered advice. It is provided without any warranty of any kind.
