Mutual funds were once a great idea. Most ordinary Americans don’t have the time, expertise or inclination to become stock market experts. Mutual funds made it easy and affordable for regular folks to pool their assets and with a single transaction, diversify a small amount of money across hundreds, or even thousands of securities, with a professional money manager at the helm.
More and more people are turning to Self-Directed IRAs. They are declaring independence from Wall Street and investing their money in ways that are much more cost efficient, and that provide a way to potentially achieve greater returns and more diversification benefit than
Traditional, open-end mutual funds, however, are no longer providing the value they once did. Indeed, most of them can’t even come close to outperforming a market cap-weighted unmanaged index of similar securities, once you take their expense ratios into account. Add in hidden costs like bid-ask spreads, capital gains taxes from high-turnover funds, churning, and the like, and the case for the traditional actively managed open-end mutual fund gets weaker every year.
But the reality is even worse. A large percentage of prominent actively-managed mutual funds actually behave like high-cost index funds. That is, they are closet index funds. Their performance is highly correlated with much more cost-efficient index funds – for which they charge a huge premium in expense ratios and other fees – sometimes up to ten times as much.
Self-Directed IRAs allow you, the individual investor, to sidestep the shortcomings of the Wall Street mutual fund industry, by allowing you to take more personal control of your retirement assets – and invest them in a wider variety of asset classes, including the following:
- Rental real estate
- Commercial property
- Tax liens and investments
- Closely-held C corporations
- Farms and ranches
- Gold and precious metals
And much, much more.
The best part: None of these investments charge you a percentage of their value just for the privilege of owning them. All businesses have internal expenses, yes – and these reduce eventual profits. But the same goes for every company in a stock mutual fund portfolio. The fees a traditional open-end mutual fund charges – averaging nearly 1 percent per year, according to Morningstar – are in addition to the internal day-to-day business expenses of the underlying businesses in the portfolio – and are typically payments to the fund manager for underperforming what you could get from an index fund.
When you choose to use a self-directed strategy with American IRA, LLC, however, you don’t pay that 1 percent additional fee off the top to some money manager to underperform the market. Instead, you pay only for the transactions you actually make, using a simple, flat rate menu.
For most of our customers, this equates to hundred or even thousands of dollars per year in savings.
Meanwhile, Self-Directed IRA owners often own a wider variety of asset classes than those who restrict themselves to prominent mutual funds.
If you are tired of the shenanigans of Wall Street and the mutual fund industry, with their high costs, high fees and hidden expenditures that sap your portfolio over time, American IRA, LLC would like to work with you.
American IRA is among the leading companies in the country providing third party administration services for owners of Self-Directed IRAs. For more information, call us at 866-7500-IRA(472), or visit our Web page at www.americanira.com.
We look forward to working with you.