Is a self directed IRA even worth it?

[Matt Millard]

Even with using the lowest cost IRA provider out there the fee for 4 separate accounts is over $600 annually assuming my wife & I open a Roth & traditional each. If I put this in one of my best investments that takes IRA Money it earns around 15%. However the account still wouldn’t meet their minimum & even if it did the cumulative fees are 3% of my investment 1st year & then slightly less after that because of growth & compounding. Over 5 years with setup fees that’s 15% of my money & investment! Why not just follow Tom McElroy’s tax advice from rich dad books & ignore all middle class savings tools including IRA’s, 401ks etc. & pay the IRS the 15% capital gains tax on the investment. Some charge me yearly others are 3, 5 or 10 years but I can’t think of a scenario this would work me unless I inherited a $500k IRA or really wanted to manage all these accounts & fees & IRS contribution & withdrawal rules or I took on a large gamble investment for a 30 to 100% return & got into active market again like flipping houses, etc. I guess I would rather pay the IRS less than a company like Quest IRA?

[Carl Fischer]

@Matt Millard

It sounds like you don’t pay much tax right now. I hear it all the time. You will find merit and $ by taking advantage of tax free and tax deferred accounts. Everyone that has money uses qualified plans. I don’t know of any that don’t. They may not be all self directed but many are for good reason-control,true diversity, etc. 

SDIRA qualified plans increase earnings for many by 50%. If you make $100k in a Roth you spend $100k minus $150-$500 fee for the Ira administrator.   Versus only getting $$50k.  Even if it only $20k taxes it’s worth it to me. Go from forever taxed to never taxed.  $20k/yr for 50 years is $1m. 

It may not be right for you now but if you are successful I’ll bet you will have one. Or is it you get one and then you will be succesful. 🧐

There are also some very powerful strategies some smart people employ. 

Good luck, don’t rush it, open a Roth with no fees to at least have one in case they are stop having them as well as starting the ownership clock.