A Roth Individual Retirement Account is a tax-favored savings structure for consumers. Contributing to a Roth IRA eventually provides tax free income to supplement retirement income. While you are not authorized to be the custodian of your own Roth IRA, you can manage your assets in a self-directed Roth IRA.
Self-Directed Roth IRA Autonomy
Managing your own Roth IRA means you choose what investments you want. These are known as self-directed IRAs, as opposed to managed investment accounts. There are various levels of autonomy with self-directed IRAs. An online Roth IRA account is often completely autonomous with owners performing all research and making investment decisions. A full service brokerage account has a financial adviser making recommendations with the owner making all final decisions. As an IRA owner, it is your choice how much help you want in making investment decisions.
Self-directed Roth IRA accounts have many investment options allowed by the IRS. Permitted investments include certificates of deposit, stocks, bonds, mutual funds, investment properties and certain types of metals. While a self-directed IRA allows you the option of what investments you want to buy and sell, few self-directed IRAs allow all investment options. The IRS does not mandate custodians to offer every investment option. Depending on what choices you want, you need to shop around for a custodian who offers them.
Why Self-Directed IRA
Choosing your investments gives you control over your retirement assets. The Internet offers research and information just a few clicks away through financial research websites and financial journals such as Kiplinger, Yahoo Finance or Moody's. With so much information readily available and so many financial advisers giving conflicting advice, taking objective information and making your own decisions ensures that they are in your best interest.
Getting Sound Advice
Ultimately, it is your right and responsibility to grow retirement savings. However, some investors lack the time and resources to get the information required to make educated decisions about IRA investments. Getting advice doesn't mean you don't make the decisions, however, it is imperative to shop around for an adviser who has your best interest as heart. Be wary of advisers pitching one type of product, such as an annuity or specific type of fund. There may be a commission structure giving the adviser an additional incentive for making the recommendation. In the end, some recommendations are not in your best interest.