Investment expenses – how to manage them in your self-directed IRA

Estimated reading time: 2 minutes(Last Updated On: April 12, 2021)

Investment expenses are oftentimes forgotten or overlooked with an IRA. Generally speaking, IRAs have a less expensive fee structure to other retirement accounts and savings products such as 401(k)s and annuities. Even self-directed IRAs, which often have a higher fee structure than an IRA held with a traditional custodian because of the significantly larger range of investment options you have available, are often more favorable than other types of accounts.

But that doesn’t mean you should get complacent when it comes to your retirement account investment expenses and fees. In order to maximize your overall investment returns, it’s important to keep those investment fees and expenses as low as possible. Here are tips for doing so in your self-directed IRA.

Don’t churn. Rapid movements in and out of investments will cause your transaction fees and investment expenses to rise rapidly. And not only will this incur more transaction fees within your account, it’s also likely to put your retirement savings at too much risk. Trying to time the market and “day trade” generally ends up being a losing proposition for most individual investors.

Choose the right account type. Certain custodians, including Quest Trust Company, offer different types of self-directed IRAs. In addition to the Traditional and Roth IRAs, for example, Quest Trust Company also offers 5 other types of accounts that can all be self-directed.

Look for tiered pricing and pricing options. Lower your investment expenses by looking for a self-directed IRA custodian that offers tiered pricing and multiple pricing options. The needs of a $100,000 account are likely to be different from a $1 million account, so the applicable pricing should reflect this. Furthermore if you have multiple accounts, or multiple individuals within your family have accounts, you may wish to consider a custodian that offers a flat fee option or family type pricing.

Don’t forget about customer service. The old adage that “you get what you pay for” applies to self-directed IRA custodial services. Don’t assume that finding the absolute lowest price custodian and the lowest investment expenses is going to be the best decision. You need to be confident that your custodian is responsive to your needs, executes your transaction requests promptly and efficiently, and is always available to answer your questions.

Unfortunately, it’s far too common for investors to ignore the effect that investment expenses have on the long term values of their retirement accounts. In order to make sure you save as much as possible for retirement, pay attention to those fees and investment expenses and try to keep them as low as possible, consistent with your trading and investing goals.

Quest Trust Company helps change people’s lives and financial future through self-directed IRA investment education. Quest Trust Company helps people invest in what they know best and build their financial future on their own terms.