DIY Investment Management of Retirement Assets

As baby boomers begin to retire, the burden of making management decisions regarding their retirement assets may seem daunting.

This is especially true for those who choose to forego using professional investment advisors and instead self-manage their assets. Despite the challenges, there are benefits to choosing to manage your retirement assets on your own, particularly if you are a business owner with expertise in the area in which you choose to invest your funds. The primary benefits associated with managing your retirement assets are:

  • Exercising greater control over what types of investments you make,
  • Enjoying greater flexibility in organizing these investments, and
  • Avoiding high fees sometimes associated with having a financial advisor.

If you choose to pursue the DIY method, a reasonable option for you to explore is the self-directed Individual Retirement Account (IRA). A self-directed IRA is like other retirement accounts that allow individuals to save for retirement. A self-directed IRA can take the form of any of the more common ROTH, SEP, and traditional IRAs, allowing your investments to enjoy benefits like tax-free growth or specified tax-deferment. The self-directed IRA’s unique attribute relates to the types of investments that are permitted. Unlike standard IRAs, a self-directed IRA extends beyond mutual funds and stocks. With a self-directed IRA, a custodian can also invest in real estate, private company stock, precious metals, and all other investments available by law.

Despite the benefits of a self-directed IRA, there are considerable risks and other considerations, such as:  

  1. Clarity of Goals. One significant limitation for individuals attempting to self-manage their retirement accounts is that they lack specificity when it comes to determining their financial goals. To successfully manage retirement assets, you must understand exactly what you are trying to achieve from a financial perspective and strategically align your financial investments with those goals. Failure to do so may result in inadequate savings or over-spending. Both mistakes can lead to complications once you retire.
  2. Understanding of Financial Concepts. In addition to having a clear vision for your financial future, you must understand basic financial concepts associated with investing. For example, anyone interested in self-managing their retirement funds should be able to develop an asset allocation strategy that incorporates factors like tax rates, age of retirement, required income, and current assets. Without a solid understanding of how these various factors influence each other, you could under-save and outlive your retirement funds.
  3. Compliance with complex investment rules. Understanding your goals, and navigating complex financial concepts will not matter if you violate one of the many rules associated with investments. The federal government has a variety of regulations that govern the types of permitted transactions, who can be a party to such transactions, and the extent to which other taxes apply. For example, if you have a self-directed IRA, there are clearly defined prohibited transactions that guard against self-dealing. Your self-directed IRA is not allowed to engage in transactions with certain people, including the account owner, family members, and business partners. What constitutes self-dealing is defined by the Internal Revenue Service and case law. Figuring out which transactions are allowed is tricky, and failure to comply with IRS rules can result in hefty fines.

Give Us a Call

Navigating DIY retirements can be extremely taxing, but we can help you set up the proper legal entities to protect your investments. We can also help you avoid the pitfalls associated with self-directed IRAS and other DIY investment methods. Please contact us today to set up a meeting.

Like what you're learning?

Sign up for our free newsletter

Notes from the Chief Counsel's Desk 

and get more legal insights sent directly to your inbox.

* indicates required

Sign up for our free educational event on

Legal Life Planning

to learn how you can protect your loved ones and assets when something happens to you.

This article is a service of Sky Unlimited Legal Advisory PC, Personal Family Lawyer® .  We're not your traditional law firm, we stand apart from the rest by helping you make informed and empowered decisions on how to deal with your business throughout life and in the event of an emergency. We offer a complete spectrum of legal services, including a New Business Planning Session or an Existing Business Review Session, which includes a review of all the legal, insurance, financial, and tax systems you need for your business. You can begin by calling our office at (650) 761-0992 today or book online to schedule a Business Planning Session and mention this article to find out how to get this $950 session at no charge.

Having a will simply is not enough.  It doesn't guarantee the care of your children if the unthinkable happens!  See how we do it differently...

The strategies that are appropriate for protecting your assets are different for every family.  Check out our proven process that gives you peace of mind...

Our unique legacy process gives your loved ones a precious gift - a lasting expression of your love.  Find out what we offer with every plan...