It’s Only My Retirement I’m Trusting You To Manage

At the age of 37, I finally decided to pay attention to my retirement account and take more of an active role in managing how I am investing and saving for retirement. Until this point, I had relied on my financial planner to tell me where to invest my money, as I trusted his professional opinion on how best to plan for retirement. My money was invested in the standard mix of small cap, large cap, bonds, and international mutual funds with a large brokerage firm, which is where most financial advisors will tell you is best for a safe, diversified portfolio. But, unfortunately, I didn’t ever take the time to learn how these professional money managers make their money. And of course, the money managers don’t explain how they make their money either. If you don’t know how expense ratios, management fees, trading fees, load fees, and 12b-1 fees can affect your accounts, you should really start to educate yourself. Here are a few places to start:

Pay Attention To Expense Ratios

Are Fees Depleting Your Retirement Savings?

Now, I’m not blaming the money managers for taking their cut. For some, they provide exactly what investors are looking for. And honestly, the only person I can blame is myself for not taking the time to get educated and understand what I am investing in. But what put me over the edge was when I recently opened up a new account for my daughter. I used my financial planner to open a UGMA account (Uniform Gift to Minors Act) through the brokerage firm I had my mutual funds with and they immediately took a 2.5% fee. My initial investment of $10,000 showed up as $9,750 when her account was opened. That $250 seemed like quite a large fee for literally hitting a few buttons on the computer to set up my account. He didn’t even recommend what funds to invest in; I chose the funds myself. This made me start to really look at how my retirement accounts were being managed and how the fees were affecting my return; the advertised 8% fund return was really more like 5% on my actual account. Take inflation into account, and I’m barely making any money.

I knew I could do better than that through mortgage note investing. In fact, my current plan has me growing the account to $1 million in 20 years.

So, I finally took the plunge and changed my Roth IRA into a Self-Directed account where I can manage my own investments. Not only do I now know exactly what my return will be, I fully understand what I am invested in, what fees are involved, and am completely in charge of my own account. It feels pretty good!

Opening up a self-directed IRA may not be for everyone, but I challenge everyone reading this blog post to at least start educating yourself on how expense ratios and management fees are affecting your retirement fund. Start asking the money managers more questions, and don’t expect for someone else to care more about your retirement account than you.

Written by Stuart Grazier