Top 10 Reasons Why You Should Self-Direct Your Retirement Instead of Investing in Mutual Funds
There are thousands of so-called financial advisors telling you to invest in mutual funds, money market accounts, stocks, bonds, and life insurance policies and diversify your retirement portfolio. This is some of the worst financial advice you can get and the general public has been misled by the big investment companies like Fidelity, Charles Schwab and the big banks for years. These so called financial advisors who work for these big companies have very limited or no training and are not incentivized in the right way. They make so much money from business fees and annual fees that they can never get ahead, even if they could beat inflation in the first place with their investments. Well, you don’t have to put up with this robbery anymore. There are retirement vehicles and custodians like Fidelities and Charles Schwab that allow you to self-direct your retirement into almost any investment option you want and control your own financial future instead of handing it over to one of these so-called financial advisors. What is a self-directed retirement account? It’s an account like you’d have at Fidelity or a similar company, but you can pretty much invest it in whatever you want instead of being limited to what the world’s Fidelities allow you to invest in, where they get the most commissions. . So you can open an IRA, 401k, Roth IRA, and HSA (Health Savings Account) that you can really make decisions and invest with. Here are the top 10 reasons why you should self-manage your own retirement instead of giving it to one of these big companies that basically steal your money in commissions.
(1) Your own retirement account address is the only way to protect your own retirement. If you don’t take control of your own retirement investments and educate yourself on alternative investment options, you will lose purchasing power and your retirement accounts will likely lose another 30% – 40% as we have just seen with some of the major economic problems facing We’re seeing. . Massive inflation is coming, so you need to invest in assets that will produce a higher return.
(2) Self-directed custodians often have fee structures that don’t fully exhaust their returns like traditional IRAs and retirement companies. It typically has much smaller transaction fees, much lower annual fees, and you can find ways to lower the fees even further as a percentage of your retirement account. You want to keep the interest and returns you earn, not pay them back in the form of fees that can significantly hamper your retirement growth.
(3) You can build your retirement 1,000% faster by self-directing your retirement than not. If you’re investing in traditional investments like mutual funds and stocks, you’ll only get the long-term historical average of those investments, at best depending on the economic stability of the market. Long-term historical averages are around 8% – 10%. With inflation historically at 3% to 3.5% and even higher inflation expected, that’s not a high enough return. By investing in alternative investment options, like real estate, you can get more than 15% return on your money without even using leverage. You can even leverage real estate (get a real estate loan) within your own retirement account, boosting your earnings by more than 20%. Now, that’s power, especially when you can do it safely with the right risk mitigation techniques in place.
(4) By self-directing your own retirement account, you can actively control your investments. By investing the traditional way, you have absolutely no control and you have a significant amount of risk when investing in mutual funds and stocks. You are at the mercy of what the market does. When you direct your own retirement, you can control the assets within your account. You can structure investments so that no matter what the market does, you build residual cash flow into your account so you don’t have to worry about market fluctuations. It also has the power to increase the value of assets within our account. Plus, if you buy real estate at a discount inside your IRA, not only can you sell it for a big profit, you’re building your retirement account tax-free.
(5) Tax-free investing is one of the biggest benefits of investing in a self-directed IRA. Can you imagine buying a rental property worth $100,000 for $75,000, renting it out for $1,000 per month, having all of the income tax-free in your retirement account, and then when you go to sell the property for $100,000, the $25,000 in earnings is taxes? free too. No capital gains tax and no rental income tax. This can compound the growth of your retirement accounts at an amazing rate.
(6) Creating an annuity within your retirement account is critical to your retirement plan. For example, if you need $5,000 a month to live on in retirement and can make a conservative 10% of your money into your account, you need $600,000 in your retirement account to retire and NEVER deplete your principal. If you leverage your investments and earn 15% of your money within your retirement account, you only need $400,000 in your retirement accounts. So, unlike what most financial planners will tell you, you don’t need $10,000,000 in your retirement account to retire. Now keep in mind that if your expenses are $5,000 per month, you want to earn $7,500 per month passively so that you can continue to grow your income and protect yourself from losing purchasing power due to inflation.
(7) Current tax planning and savings on current taxes is a great advantage for self-directed investments. If you invest in an IRA, your current contribution limit is $5,000 and $16,000 for a 401k. This can bring a big tax advantage because the contribution directly lowers your taxable income dollar for dollar. If you set up a plan only (k) or a pension plan, you can contribute close to $100,000 per year and reduce your taxable income by $100,000. This is unreal. You are saving $35,000 per year by doing this if you are in a 35% tax bracket. Tax rates are rising because the government and states are bankrupt, making tax planning even more crucial. You can then take that $100,000, invest in passive cash flow investment property, and have the income that earns you 15% more of your money. With both combined, you just earned $50,000 ($35,000 tax savings + $15,000 interest) on your $100,000 that year. Now, if that’s not going to get you to your goals, I don’t know what will.
(8) Self-directed investing increases your education and your ability to protect yourself rather than rely on someone else for your retirement. By self-directing your retirement, you are now taking control of your own retirement. With that comes the need for you to educate yourself on additional investment options and the risks and rewards of those options. This education is going to be key to your future success and financial stability. The more educated you are, the more stable you will be because as economic changes happen, you will be in a better position to protect yourself and adjust your retirement portfolio accordingly.
(9) Additional investment options are needed to secure your future. There are so many investments that produce additional returns. You can still invest in stocks, bonds, mutual funds like traditional companies allow you to invest, but you can also invest in real estate, real estate secured notes, tax liens, businesses, syndicated and structured investments and much, much more. Your options are limitless.
(10) Your peace of mind knowing that you have been able to structure yourself to protect yourself against economic fluctuations is HUGE. Now you can rest easy knowing that you have educated yourself correctly, have invested in vehicles that can give you higher returns and have the power to control your own financial destiny is the best benefit you can ask for. Most people have little or no financial knowledge and that is why most people are broke. The more you educate yourself, the more successful you will be.
There are many companies that can help you manage your retirement account yourself, and many companies that can help you structure your self-directed IRA into multiple cash streams. Learn from those companies and strive to take action on your own financial future instead of relying on so-called financial advisors to do it for you, but they are failing at an alarming rate.