If you are not self-directing

If a person has their Roth IRA or their Traditional IRA through a broker they are only allowed to invest in specific mutual funds, bonds, and stocks, etc. The broker has the main control about what a person is able to invest in. These brokers will not invest a person's money in other things such as real estate or in new startup companies.

The bottom line is if a person is not self-directing their retirement plan, someone else is directing it for them and may not be making the kind of money that could be made if the person was self-directing their retirement plan.

So you have control

Many people do not mind that their employer has control over their retirement plan. Maybe they feel their already have enough to worry about, maybe they do not want to learn more about investing their money, or maybe they do not feel like taking any higher risks with their retirement. While having an employer be in control of a person's retirement may be a little easier, it is not always the best decision.

When a person is self-directing their own retirement plan they will be able to decide where they put their money. And hopefully build a retirement account that will work for them and their family when they retire.

Dealing with risks

While mutual funds, stocks, and bonds tend to be less risky than other types of investments, there is other type of risk involved. A person who is not self-directing their retirement plan has to deal with the risks of sudden drops in the price of different stock that their retirement is invested in if there is any type of negative news announced by the media etc.

When a person has most control over their retirement plan and is self-directing the investments they are able to decide which risks they want to take and which ones they do not want to deal with.

You know what you need

Only a person really knows how much money they think they need for the kind of retired life they want to live. Of course a person can explain what they hope for to their broker, but a broker works with many, many people.

When a person decides to self-direct their retirement plan they will have a better idea of their financial goals for retirement and have a better handle of getting them accomplished. Of course it does not hurt for them to do research and get some advice so that they are able to make the right decisions regarding their investments.

There is help

Instead of a person relying on a broker for all of their retirement decisions, there are companies that will help a person get started in self-directing their retirement. They can help a person do everything correctly so that they do not do anything wrong and do not have to deal with any penalties.