SDIRA experience - is it really worth the hype?

[David C.]

I have been looking opening a SDIRA.  I have read/heard many tout the overall benefits and flexibility of using an SDIRA, but when I looked into it a little more, the SDIRA seemed to lose its luster with several restrictions and underlying fees by custodians.

#1) Restrictions - Cannot "self deal" as this is a conflict of interest - This seemed couter-intuitive to me.  Isn't a retirement all about serving yourself later in life?  This then limits all business activity(other than the initial investment) to be with outside of your own control (i.e. you have no direct control over the investment itself).  That is a bit worrysome - if you are not careful, you could get taken for a ride by a less-than scrupulous business entity/individual.  I have read some horror stories of this (Google SDIRA scams, there are many).  That being said, I realize anyone can get scammed, if not careful.

#2) Fees - While fees are typically not huge, they do add up over time, and even a 1% fee over the life of an IRA can drastically chew up potential returns.

#3) Having faith in your custodial service.  There was a prior post on BP that referred to a litigation case involving a Trust company where the end result was the sentencing of two individuals with fraud, and millions of dollars of SDIRA dollars lost.  That's scary!

So:

For those who have used SDIRAs(or those who avoid them), please comment, as this is an investment that is both intriguing and perhaps mine laden (if not very careful), from what I see.

Thanks,

Dave