Experts acknowledge that\u00a0the move will open\u00a0a\u00a0wider range of options for Americans\u00a0curating their retirement portfolios, including riskier opportunities that may have a higher payoff, but critics say that risk may not be worth it for less experienced\u00a0investors and individuals nearing retirement age.\u00a0<\/p>\n
<\/p>\n
Ed Slott, a Rockville Centre-based retirement expert, seen here in March 2021, said, “Usually, it’s wealthier investors who are willing to take more risks and willing to lose money because they can afford to.\u201d Credit: Kendall Rodriguez<\/p>\n
\u201cMost investors are probably not savvy enough to understand private investments,\u201d said Ed Slott, a Rockville Centre-based retirement expert and founder of IRAHelp.com, which offers retirement account expertise and analysis. \u201cUsually, it’s wealthier investors who are willing to take more risks and willing to lose money because they can afford to.\u201d<\/p>\n
WHAT NEWSDAY FOUNDA new Trump executive order\u00a0would potentially open the door for millions of employees saving for retirement \u2014 including on Long Island \u2014 to invest their funds in alternative plan.The White House said\u00a0the order creates opportunity for Americans to make more lucrative investments through their employer\u2019s retirement plans.Experts say\u00a0the move\u00a0will open a wider range of options for Americans curating their retirement portfolios, but might be riskier\u00a0for less experienced investors and individuals nearing retirement age.<\/p>\n
Others experts, however, emphasized the benefits that the expanded investment choices could offer especially to\u00a0younger Americans saving for retirement<\/a>.<\/p>\n “This is going to open up a ton more access for individual investors and it’s obviously going to be a net positive for crypto,\u201d said Andrew Rocco, stock strategist at Chicago-based Zacks Investment Research.<\/p>\n Younger Americans might benefit<\/p>\n Younger Americans with more time to absorb potential losses could benefit from investing in riskier portfolios, experts said.\u00a0<\/p>\n Millennials especially, who might be behind on retirement<\/a> or fed up with inflation, might see the opportunity to invest in cryptocurrencies as an \u201cescape hatch,\u201d Rocco said.\u00a0<\/p>\n For younger Long Islanders struggling to keep up with a “quickly evolving financial landscape,” the expanded options could “catapult us back into the financial trajectory that our parents and grandparents were in,” said Dan Lloyd, founder and president of Minority Millennials, a nonprofit that aims to represent young minority groups in Long Island policies.\u00a0<\/p>\n Amityville resident and financial adviser Jeffrey St. Simon, 35, said he might adjust his retirement strategy as the executive order comes into play. But\u00a0he pointed out that even younger workers run the risk of an investment falling through as they approach retirement age.\u00a0<\/p>\n “I\u2019m not going to invest in a private company in my retirement account unless I really believe in it,” he said.\u00a0<\/p>\n Americans held $12.2 trillion in employer-provided retirement plans as of late March, of which $8.7 trillion was held in traditional 401(k) plans, according to quarterly market data<\/a> from the Investment Company Institute, a trade association for regulated investment funds worldwide.\u00a0<\/p>\n Caution urged for those near retirement<\/p>\n Slott said while riskier investments might make sense for younger 401(k) holders who have time to make up for any losses, older Islanders nearing retirement should be very cautious about pursuing private equity investments.<\/p>\n Unlike publicly traded stocks or mutual funds, managers of alternative assets often put time restrictions on when investors can cash out. Also, private companies do not publicly provide financials the way publicly traded companies do,\u00a0he said.\u00a0<\/p>\n \u201cPrivate equity is not as regulated, it\u2019s not transparent,\u201d Slott said. \u201cYou don\u2019t have the liquidity and can\u2019t get your money out of these things that fast. It\u2019s not like a publicly traded stock where you say, \u2018Sell it and give me my cash.\u201d<\/p>\n Rocco similarly said that older employees closer to retirement, such as individuals in their 50s, should be more risk averse than younger demographics.\u00a0<\/p>\n Still, representatives of Long Island’s business community\u00a0said the order ultimately gives more choice to local employers.<\/p>\n The opportunity provides “more flexibility to employers and their workforce when investing their money,” said Matt Cohen, president and CEO of the Long Island Association business group, although workers “should be sure to consult with their portfolio manager to fully understand the benefits and risks of any financial decision.”<\/p>\n No immediate impact<\/p>\n The order will not have an immediate impact<\/a> on American retirement portfolios or how employers invest in 401(k)s. It directs\u00a0federal agencies to adjust regulations to accommodate the alternative investment options, an initiative that could take months or longer.\u00a0\u00a0<\/p>\n And, it will take time for the financial landscape to catch up, said Craig Rudes, a partner at Long Island Blockchain, a technical consulting firm for blockchain technology.<\/p>\n “Crypto as an economic product is only just beginning,” he said.\u00a0<\/p>\n Mitchell O. Goldberg is president of Melville-based financial advisory firm ClientFirst Strategy Inc. Credit: Newsday\/Howard Schnapp<\/p>\n It’s unlikely that retirement plan companies and employers will be champing at the bit to offer access to private equity investments, given longtime regulations protecting retirement savers, said Mitchell O. Goldberg, president of Melville-based financial advisory firm ClientFirst Strategy Inc.<\/p>\n Federal legislation<\/a> currently obligates traditional\u00a0retirement fund companies, like Fidelity or Vanguard, to \u201cdiversify the plan’s investments in order to minimize the risk of large losses,\u201d according to the\u00a0Department of Labor<\/a>.<\/p>\n \u201cTo me, private equity and crypto is for the more sophisticated investor that understands risk and can afford losses on their investments,\u201d Goldberg said.\u00a0<\/p>\n With AP<\/p>\n","protected":false},"excerpt":{"rendered":"A new Trump executive order would potentially open the door for millions of employees\u00a0saving for retirement \u2014 including…\n","protected":false},"author":2,"featured_media":77337,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[39],"tags":[28,147,530,1666,3479,54708,54709],"class_list":["post-77336","post","type-post","status-publish","format-standard","has-post-thumbnail","category-personal-finance","tag-business","tag-personal-finance","tag-personalfinance","tag-retirement","tag-trump","tag-trump-biz","tag-trump-eos"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/77336","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=77336"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/77336\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/77337"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=77336"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=77336"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=77336"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}<\/p>\n