President Trump recently signed an executive order opening up the investment options inside your 401(k) & stated you can now achieve higher returns through additional investment options.
Two things can be true at the same time:
1. He’s right!
2. You shouldn’t change a thing in your retirement accounts.
It all depends on your risk tolerance. There is a reason why only “accredited investors” are allowed to invest in startups and the like. One of the reasons is because there is a higher amount of risk associated with those investments. If you’re not seasoned enough to weather the ups and downs then you’re not allowed to get in on one.
But like Dorothy in the Wiz, you had the power within you the whole time (to do a lot of the same investments already).
Incidentally, I lived in Kansas for a while.
Through what’s called a Self-Directed option in your 401(k) you can do a lot of the same investments, but not all. I was utilizing the Self-Directed option my whole career before I retired and it was how I was able to achieve 110% returns in my 401(k).
Which is why I can say don’t do it! You shouldn’t play with your retirement if you don’t understand the investment.
If you cannot articulate what those alternative investments do, how they move, what the downsides are, or what makes them move, then your level of investment risk may not match the investment.
The signing of the Executive Order does not mean you WILL suddenly have the alternative investments activated in your account. It means you now have the OPTION to invest in them.
A few things you SHOULD do.
Check the current status of your retirement plans. You should conduct a periodic checkup anyway.
Check with a Financial Advisor and get some professional advice.
Don’t have a Financial Advisor, get one!
But if you did check with an Advisor and you understand the risk, you absolutely will have investment opportunities unlike what you had before.
But remember, all things are not for every body (separation intended).
-Monk
We spend 12 – 20 years in school learning about every subject, except for money. Then we spend the rest of our lives trying to figure out how to make money or how to grow the money we have.
My approach to financial literacy is to teach it in a way that makes the complexities of finance so simple that your investing actions become instinctive.
To the youth, young adults, and the mothers who raise them,
Financial Literacy: Monk Says… Learn the Game