Cryptocurrency as a 401(k) Investment Option: Pros and Cons
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Here's your Money Briefing from Monday, November 7th. I'm J.R. Whelan for The Wall Street Journal. We've talked on the show before about one new option in some retirement plans. Some smaller companies that administer those plans have started offering cryptocurrency as an investment option, alongside mutual funds and other choices. Now the nation's largest 401k provider, Fidelity, has greenlit crypto as an option in its plans.
This is sort of a competitive advantage for them within the 401 industry. It differentiates them. It shows that they can add an asset class that apparently a lot of employees still are eager to invest in, especially maybe younger employees in tech-related industries.
But what do employers who actually decide which investments to offer in their 401k plans think about adding something as volatile as cryptocurrency? We'll discuss that with WSJ retirement reporter Ann Turgason, as well as the pros and cons of putting your retirement money in crypto. That's after the break.
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A growing number of workers are seeing something new in their 401ks, cryptocurrency as an investment option. But considering the volatile nature of crypto, not to mention the steep declines we've seen in the past year, why are more 401k providers including it as a place to put your retirement dollars? Wall Street Journal retirement reporter Anne Turgason has been taking a look at this, and she joins us with more. Hey, Anne, thanks very much for being with us.
Thanks for having me.
So Anne, you were with us last year after a small 401k provider said it would allow workers in those plans to invest a small amount in crypto. What's happened since then?
So since then, Fidelity, which is the largest 401k provider in the country, announced last spring that it would make Bitcoin available to the 25,000 401k plans that use it as a 401k administrator. And more recently, we've seen both Fidelity and the small company on the West Coast that was the first to announce plans to add cryptocurrency to its 401k We've seen both of those companies say very recently that they actually went live with their cryptocurrency offerings and that companies are actually starting to use those offerings.
So why have more 401k plan providers come on board, including cryptocurrency as an investment option?
Well, I think in the case of both of these companies, both Fidelity and this very small company called For Us All, which is in San Francisco, which focuses on mainly small companies, many of them in the tech industry. I think for both Fidelity and for For Us All, this is sort of a competitive advantage for them within the 401k industry. It differentiates them. It shows that, you know, they can add an asset class that apparently a lot of employees still are eager to invest in, especially maybe younger employees in tech related industries. So it provides, you know, a certain group of employers, companies and their employees with something that they are eager to add to their 401k plan.
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