Retirement Savers Eager To Invest in Real Estate and Other Private Assets—but Here’s What They Should Know

A growing number of Americans want more than stocks and bonds in their retirement plans—they want private equity, real estate, even cryptocurrency. And as a result of a new executive order from President Donald Trump, those high-risk, high-reward investments could soon be within reach.

Even after years of gangbuster 401(k) returns, nearly half of savers say they’d jump at the chance to invest in private assets through their workplace plan if given the opportunity, according to a new Schroders survey.

But the experts we spoke to emphasized caution. While the new directive signals growing support for alternative investments, the rules for actually adding them to retirement plans are far from settled.

“The 401(k) world is rather boring,” says Scott Krase, a wealth manager at Connor & Gallagher OneSource.

That’s partly by design, ensuring fairness for holders and compliance with federal laws. And while demand for these flashy investments is rising, access remains limited, understanding is low, and the risks are anything but hypothetical—putting even more pressure on savers to understand exactly what they’re buying into.

Here’s what retirement investors need to know before diving in.

What counts as a private asset—and why people want in

In financial planning terms, private assets are often lumped under the broader umbrella of “alternative investments,” Karse explains. These assets typically fall outside the realm of traditional stock-and-bond portfolios and come with a trade-off.

“For giving up liquidity, you’re getting better returns,” Krase says. In other words, you might not be able to sell or access your money for years, but the long-term growth potential may be greater than what’s offered by standard 401(k) options.

“Private real estate and private equity funds often lock investor capital for seven to 12 years with no early exit,” says Chad D. Cummings, an attorney and CPA at Cummings & Cummings Law. “That’s the major land mine when dealing with investments of this genre: These investments typically involve multiyear lockup periods, staggered capital calls, and delayed distributions tied to asset liquidation events.”

The land mine Cummings is referring to is part of the reason why these investments have historically been limited to institutional clients and high-net-worth individuals. But public appetite is rising, especially as real estate and crypto outperform expectations.

The knowledge gap is huge but the interest is there

Despite the complexity, many retirement savers say they’re ready to take the plunge into private assets if given the chance, with 45% of workplace plan participants saying they would invest in private equity or private debt if their 401(k) offered access, according to the Schroders survey—up from 36% a year ago. 

Among those interested, the enthusiasm runs deep: 77% say they would increase their retirement contributions if private investments were made available.

A driving motivation comes down to the promise of better outcomes, with 78% believing private assets can enhance a 401(k) portfolio through diversification, and 73% thinking these options offer greater potential returns than traditional stock or bond funds.

But that optimism is tempered by confusion and caution. Only 12% of participants say they feel very knowledgeable about private assets. And more than half (53%) say they find the concept risky.

Why this isn’t a flip-the-switch moment

Even with rising interest and top-down momentum, private assets won’t be popping up in 401(k) menus overnight.

“You just can’t flip a switch and change the 401(k),” says Krase. “We have to rewrite the plan document … then it has to be signed off by the fiduciary adviser as well as the employer.” After that, it could take “a month or two to add the investment.”

And that’s assuming the right investment product even exists. Most 401(k) plans are governed by ERISA, the federal law that sets strict rules for retirement plans. For alternative assets to be added in a compliant way, fund providers must build them from the ground up—and that would mean repackaging traditionally illiquid and opaque investments into vehicles that meet regulatory standards for transparency, risk, and accessibility.

“Who knows what reporting compliance will look like if this comes to fruition,” says Dan Costigan, a certified financial planner at Two Palms Financial. “Portfolio performance in alternative funds is complex. … Alternative investment managers can report performance that is both compliant and incredibly confusing.”

‘Know what you own’

Before jumping into private equity, real estate, or other alternative assets, the experts we spoke to stressed one golden rule.

“The one underlying principle that every investor has to know is: know what you own,” says Krase.

That means doing more than just clicking “accept” on a new fund offering in your 401(k) portal. Krase says investors should ask the following questions before allocating any portion of their retirement savings:

• Who’s managing the fund?
• What’s the investment strategy?
• What risks are involved—and are they clearly disclosed?
• How has the fund performed in different market conditions?

And just as important, investors need to understand their own psychology.

“Risk tolerance is personal to you,” Krase notes. “Maybe just because someone’s 25 doesn’t mean they should have 100% in stocks. Maybe their personality can’t handle that and it keeps them up at night.”

In other words, even if a new investment option promises higher returns, that doesn’t mean it’s right for your situation. For many savers—especially those new to the world of alternatives—education and self-awareness are as critical as access.

If you’re interested in investing in private equity, real estate, or other alternatives, remember that there’s extra homework involved.

These assets may offer the promise of higher returns or better diversification, but they also demand deeper understanding. Diversification should never be a blind bet, and if these options become available, the savers who benefit most will be those who ask tough questions, evaluate the risks, and align their investments with their long-term goals.