To combat the misconception of easy access to cash, Goldman Sachs has internally banned the common industry term "semi-liquid" for its alternative funds. This linguistic shift is a deliberate risk management strategy to underscore that while these products have liquidity features, they are fundamentally illiquid and access to capital is never guaranteed.

The 60/40 portfolio is obsolete because bonds, laden with credit risk, no longer offer safety. A resilient modern portfolio requires a broader mix of uncorrelated assets: cash, gold, currencies, commodities like oil and food, and short-term government debt, while actively avoiding corporate credit.

The conversation around adding alternatives to 401(k) plans is not about offering standalone private equity funds. The practical implementation is embedding this exposure within target-date funds, often as collective investment trusts, which mitigates liquidity risk and simplifies the investment decision for participants.

To solve the critical illiquidity problem for individual investors, Goldman Sachs operates a proprietary, quarterly secondary market developed over 20 years. This platform allows its wealth clients to list and sell their alternative investment positions, transacting over a billion dollars in NAV annually and providing a crucial liquidity solution.

While fears of retail investors gambling on venture capital exist, the primary growth in retail alternatives is in yield-oriented strategies like private credit and infrastructure. These products meet the demand for high current income and lower volatility, especially for those in or near retirement, making them a more logical first step.

While client education is important, Goldman Sachs identifies financial advisors as the primary bottleneck for growth. Many advisors outside the ultra-high-net-worth space lack knowledge on alternatives, making comprehensive advisor education paramount for broader market penetration and successful product distribution.

Goldman's product strategy for alternatives is tiered by wealth. While ultra-high-net-worth clients see a broad spectrum of products, the high-net-worth segment is primarily offered yield-based funds like private credit. The compelling quarterly cash distributions are easier to understand and help psychologically de-risk the investment for this audience.

Contrary to the retail investor's focus on high-yield funds, the 'smart money' first ensures the safety of their capital. They allocate the majority of their portfolio (50-70%) to secure assets, protecting their core fortune before taking calculated risks with the remainder.

To navigate an era of government debt overwhelming monetary policy, investor Lynn Alden proposes a specific three-pillar portfolio. It allocates 50% to profitable equities, 20% to cash for optionality, and a significant 30% to inflation-hedging hard assets like commodities, precious metals, and Bitcoin.