According to a report published by the Employee Benefit Research Institute, Americans hold nearly nine trillion dollars in various forms of retirement accounts – including IRAs and 401Ks. However, the sad truth is that the majority of those assets will never generate the kinds of returns necessary to provide a comfortable retirement for their owners.

The reasons for that fact are numerous. Limited or poor investment options, high (and often hidden) fees, and volatile market conditions all can conspire to dramatically reduce the total return for a retirement account. Since these accounts are generally held for a long term, even small reductions in total returns add up to large reductions in final portfolio size. Larger reductions in returns have an even more dramatic impact.

If you allow this to happen to you, the net result can be the difference between a very prosperous retirement and near-poverty. Here’s what you can do to avoid that fate…

401K Accounts

In the case of a 401K account with a previous employer, you have the option of rolling over that money into your own self-directed IRA account. If you choose the right custodian, you will have a wide range of investment options – many with better projected returns than most traditional options provide. We’ll discuss how to choose the right custodian in just a minute.

In the case of a 401K account with a current employer – you can’t move your account. However, you can study the investment options available, educate yourself about the fee structures (new disclosure laws are coming into effect soon), and avoid emotion-driven investment decisions.

IRA Accounts

If you have a self-directed IRA account, check with your current custodian to review the range of investment options they have available. Most only offer traditional options such as individual stocks or bonds, stock and bond mutual funds, CDs, money-market funds and REITs. In that case, you have the option of moving all or part of your money to a self-directed IRA custodian with more flexible options. Many allow investments in real estate, trust deeds, mortgage pools and private placements. These types of investments have the potential to provide excellent returns with relatively low risk.

Choosing the Right Self-Directed IRA Custodian

It’s easy to find IRA custodians – simply Google “IRA Custodian” and a number of them will show up in the search results. If possible, try to find those with an office near you. Then you can go visit them if you have a question or concern. (If not – it is possible to manage your accounts remotely.) Also find out what investment options they have available, and be sure to get a summary of their fees. It’s generally a good idea to compare fees across different providers and consider how they will affect your portfolio. Since most of the fees are absolute amounts rather than percentages, they affect larger portfolios less than smaller ones – but they will have the effect of reducing your total return. However, if you choose the right investments you can more than make up your custodian’s fees.

So there you go – by choosing the right self-directed IRA custodian for your old 401K or current IRA, and by investing that money in the right alternate investment, you can grow your retirement portfolio at a healthy rate and enjoy a secure and prosperous retirement.