Bible Money Matters

Christian personal finance

Menu
    • About
    • Archives
    • Contact
    • Close
  • Making Money
      • Popular Articles

        • 50 Ways To Make Money: Maximizing, Creating And Increasing Your Income
        • 10 Weird And Unconventional Ways To Make Money
        • Making Money With A Blog (e-Book)
        • 10 Places To Sell Or Trade Your Unused (Or Broken) Electronics
        • Ways To Make Extra Money Series: 20 More Income Generating Ideas From Our Readers
        • Making Side Income Can Help Blunt The Impact Of Becoming A One Income Family
        • Earn Cash Back With Discover it® Credit Card
      • Recent Articles – Making Money

        • Best Sites Like Fiverr To Make Money As A Freelancer
        • 13 Of The Best Independent Contractor Jobs
        • 25 Of The Best Gig Economy Jobs
        • How To Make Money Blogging: Turn A Blog Into A Business
      • Categories

        • Making Money
        • Investing
        • Retirement
        • Jobs & Work LIfe
        • Money
        • Income
    • Close
  • Saving Money
      • Popular Articles

        • 50 Easy Ways To Save Money Every Month
        • 10 Weird And Unconventional Ways To Save Money
        • 10 Practical Ways To Save Money And Increase Your Net Worth
        • How To Save Money On Just About All Of Your Regular Monthly Bills
        • Ways To Watch TV Without Paying An Arm And A Leg For Cable TV
        • Save Money On Your Hospital Bill - Just By Asking
      • Recent Articles – Saving Money

        • How To Save $100k In 7 Practical Steps
        • Stairs App Review: Save And Invest To Earn 4-6% Interest
        • Honey Review: Save Money Automatically When You Shop Online
        • 9 Convincing Reasons Why You Need An Emergency Fund
      • Categories

        • Saving Money
        • Frugality
        • Planning
        • Finance
        • Saving For Retirement
        • Savings Accounts
    • Close
  • Banking
      • Best Rates For 2019

        • Best Credit Cards
        • Best Savings Accounts
        • Best Mortgage Rates
        • Best CD Rates
        • Best Brokerages
        • Free Credit Scores
      • Recent Reviews

        • TradeStation Review: Commission Free Stock And ETF Trades
        • Firstrade Review: Commission Free Trades on Stocks, Crypto, And Options
        • Cadre Real Estate Investing Review: Commercial Real Estate Investing
        • Axos Self Directed Trading Review: Invest, Trade Stocks For Free
      • Categories

        • Bank & Software Reviews
        • Investing
        • Credit
        • Banking
        • Mortgage
        • Insurance
        • Family Budget
    • Close
  • Recommended
  • Video
    • Close

Don’t Like Your Company 401(k) Options? Open a Self-Directed Account

By Miranda Marquit 5 Comments - The content of this website often contains affiliate links and I may be compensated if you buy through those links (at no cost to you!). Learn more about how we make money. Last edited May 23, 2013.

Share22
Pin12
Tweet22
Share4
60 Shares

One of the concerns you should have as you invest in your retirement is whether or not the options offered by your employer are in accordance with what you want to out of retirement later.

Unfortunately, just putting money in your 401(k) doesn’t automatically ensure a successful retirement. In fact, the options that you have for your 401(k) might not be what you need to improve your situation and help you reach your retirement goals. Many employers have default options that are heavy on company stock, or on high-cost funds.

Take a look at your options; if what your employer offers is inadequate, consider opening a self-directed retirement account.

What is a Self-Directed Retirement Account?

company 401k versus self directed investingA self-directed account is usually an IRA that is handled by a custodian. (It’s also possible, if you qualify, to open a self-directed Solo 401(k)). Even though you direct your asset allocation within the plan, you still need to have a qualified custodian run the plan for you.

With a self-directed account, you can choose what you invest in. As long as the IRS approves of the investments you include, and your custodian is willing to handle it, it can go in your self-directed retirement account.

Benefits of a Self-Directed Retirement Account

Daniel Sentell is with Broad Financial, and he offers some insights into how a self-directed retirement account can help you. First of all, a self-directed retirement account provides you with full asset choice. “No need to ride the stock market roller coaster,” he says. “Popular investments include local real estate and niche businesses.” If you want to take an alternative direction and reap the benefits of a tax-advantaged account, you can use use a self-directed account to your advantage.

On top of that, Sentell says that many self-directed accounts come with lower fee than brokerage-based retirement plans. Fees represent a huge drain on your wealth. Higher investment fees erode your real returns. If you can set up a self-directed retirement account with lower fees, more of your money is put to work on your behalf. You will always have to pay fees, but you can reduce their impact.

Finally, Sentell points out that there is a great deal of personal involvement with self-directed plans. This can “insure profitability and asset attention.” With a self-directed plan, you have to pay better attention to what’s going on with your investments. Additionally, these plans allow you to focus on assets that you are familiar with, and that make sense to you. If you have a familiarity with certain assets, you can include them in your retirement plan, enjoy a tax advantage, and potentially enjoy better returns.

Remember, though, that there are risks involved with self-directed plans. If you add assets that come with higher risks, you will end up with a greater risk of loss. Many investors who choose self-directed accounts do so in order to break outside the equity and bond funds seen in most employer plans and conventional plans. If you go this route, you need to be prepared for the consequences.

  • Best Places To Open A Retirement Account

Related Posts

  • Is The Beneficiary Updated On Your Retirement Account? Your Heirs Are Hoping So.

    Most people want to leave money for their family. If they don't update their retirement account beneficiary forms, their heirs may be left with nothing.

  • Is The Beneficiary Updated On Your Retirement Account? Your Heirs Are Hoping So.

    Most people want to leave money for their family. If they don't update their retirement account beneficiary forms, their heirs may be left with nothing.

  • Can You Open A Roth IRA For Your Child?

    Can you open a Roth IRA for your child? The answer is yes - sort of. In certain situations you may be able to open…

Share22
Pin12
Tweet22
Share4
60 Shares
Last Edited: 23rd May 2013 The content of biblemoneymatters.com is for general information purposes only and does not constitute professional advice. Visitors to biblemoneymatters.com should not act upon the content or information without first seeking appropriate professional advice. In accordance with the latest FTC guidelines, we declare that we have a financial relationship with every company mentioned on this site.

This article is about: Investing, Retirement

About Miranda Marquit

Miranda is a freelance writer and professional blogger. She writes for a number of personal finance blogs, including the AllBusiness Personal Finance Corner. She has a M.A. in journalism, and is the main author of Planting Money Seeds. Miranda lives Utah, where she enjoys spending her free time reading, traveling and playing with her son and husband.

Comments

    Share Your Thoughts: Cancel reply

  1. Roger @ The Chicago Financial Planner says

    A few thoughts:

    First some 401(k) plans offer a brokerage window within the plan where participants can generally invest in most anything they want. For example a client whose plan is administered by Fidelity offers this option which has some 5,000 choices available.

    I would be hesitant to tell anyone whose plan offers a match not to at least contribute enough to earn the full match. This is free money.

    401(k) deferrals via payroll deduction are painless, before someone forgoes contributing they need to make sure they have the discipline to contribute elsewhere.

    The main component in retirement savings success has been shown to the amount saved which is far more important than the quality of the invest options offered.

    Contribution limits for a 401(k) are much higher than for an IRA.

    I’ve seen some pretty awful 401(k) plans over the course of my career. I would caution anyone to think hard before they completely opt out though. Even with the worst plans there are often a couple decent options that can be over weighted and then the participant can round out their overall allocation with outside investments.

    Reply
  2. John S @ Frugal Rules says

    Good post. I think for many they prefer the set it and forget it mentality of the 401k and do not consider opening an IRA. Like Roger though, I would hesitate against telling people to not at least get the match, if offered. Most plans, even if bad, will offer at least a few good Large Cap funds that might be good choices. Additionally, just by opening a self-directed IRA’s does not mean you’ll be free of fees. There are still brokerages out there that do charge needless fees that can eat away at your portfolio.

    Reply
  3. Bob Braxton says

    Fortunately my employer non-profit offered two good families and I used both 50-50: TIAA-CREF and the other starts with “V”

    Reply
    • Peter Anderson says

      I’m gonna hazard a guess that it’s Vanguard??

      Reply
  4. MMD @ IRA vs 401k Central says

    When I first read about self directed 401k’s, I was very intrigued. However the rules of our employer 401k are old-fashioned and I doubt I would be successful at getting them to let me start one. However it is interesting to know it exists as an option. You could really ramp up the savings if you were looking to maximize!

    Reply
Previous Post: The Great Big List Of Things To Do When Getting Ready To Sell Your House
Next Post: Cutting Our Mobile And Home Phone Bills: How Is It Going After A Few Months Using Ooma and FreedomPop?
Discover Investment Platforms

Popular Posts

  • 21 Easy Ways To Earn Free Amazon Gift Cards
  • 10 Best Free Tax Filing Services And Software Online
  • 21 Apps That Pay You Real Money Fast
  • 17 TV Apps And Live TV Streaming Services To Watch TV Free
  • 30 Legit Online Jobs That Pay Well
  • 37 Easy Ways To Get Free Gift Cards
  • How To Get Free Stock
  • 40 Easy Ways To Get Free Money Fast
  • 21 Places To Read Free Books Online
  • 24 Legit Online Jobs
  • 17 Best Work From Home Jobs: A List Of Legit Online Jobs That Pay Well

Recent Posts

  • How To Save $100k In 7 Practical Steps
  • How to Save Money When Remodeling A Home
  • How To Hire A Contractor For Your Remodeling Project
  • Remembering 9/11 Years Later: Where Were You On That Fateful Day?
  • TradeStation Review: Commission Free Stock And ETF Trades
  • Firstrade Review: Commission Free Trades on Stocks, Crypto, And Options
  • Cadre Real Estate Investing Review: Commercial Real Estate Investing
  • Best Sites Like Fiverr To Make Money As A Freelancer
  • Axos Self Directed Trading Review: Invest, Trade Stocks For Free
  • 30 Quotes About Easter And Resurrection: He Is Risen!

Disclaimer

The information contained in BibleMoneyMatters.com is for general information or entertainment purposes only and does not constitute professional financial advice. Please contact an independent financial professional for advice regarding your specific situation.

In accordance with FTC guidelines, we state that we have a financial relationship with some of the companies mentioned in this website. This may include receiving access to free products and services for product and service reviews and giveaways.

Any references to third party products, rates, or websites are subject to change without notice. We do our best to maintain current information, but due to the rapidly changing environment, some information may have changed since it was published. Please do the appropriate research before participating in any third party offers.

Amazon and the Amazon logo are trademarks of Amazon.com, Inc. or its affiliates.

We respect your privacy: Privacy Policy.

Thanks for visiting!

Bible Money Matters - Seen On These Sites and more..
Bible Money Matters is a personal finance, entrepreneurship and investing community. Give more, save more and live more.

Copyright © 2023 · Bible Money Matters | Sitemap | Advertise | Privacy Policy