Trump's Executive Order: A Threat to Retirement Portfolios

The executive order by President Trump has relaxed regulations for investing 401(k) savings in high-risk assets like cryptocurrencies. While this may seem attractive to some investors, it can be detrimental to retirement portfolios due to their volatility and lack of underlying value.

According to the Government Accountability Office (GAO), adding Bitcoin to a retirement portfolio can lead to losses five times worse than a traditional mix of stocks and bonds. This is because cryptocurrency prices tend to move like a financial roller coaster, with frequent and massive price drops that can happen without warning.

The GAO found that between 2017 and 2023, the five crypto assets available to 401(k) plans were four to 12 times as volatile as the S&P 500. This means that while the S&P 500 might go up or down 0.50% to 1% on a typical day, cryptocurrencies can easily swing 5% to 10% or more.

Crypto-related scams and thefts have also been on the rise, with Americans losing over $9 billion in 2024. Unlike traditional bank accounts or investment accounts that offer fraud protection and failure insurance, crypto losses are typically permanent and unrecoverable.