Greetings and a Roth vs. Trad. IRA investing question

[snafu]

I find it pointless to fret over retirement withdrawal in 30 years because I believe given the demographics, I believe taxation laws will be rewritten over the next 30 years. If the government decides there is too much wealth amassed in the ROTH system, they'll change the tax relationships.

We see people who worked 30 - 35 years needing to fund 35 years of retirement. They need to make adjustments in allocations in spite of their defined pensions since 10% interest rates disappeared. When Bond values eventually drop, bond holders will be selling and leaping into equities or some new product that we haven't seen yet.

I remember life before Smart phones and even when only a small percentage of folks had mobile phones; I expect change and know the one thing I can count on is change.

[smk]

Thank-you. I'm looking forward to the weekend to chew this over.

A quick glance at what your calculations were seems to argue for Roth for bonds now when stocks are the majority of my allocations, and later, when I'm older, the reverse. But that is at first glance. I'm not intuitively mathematical, but I can reason it out with a little time and a quiet house. I'll come back and ask if I find something I can't manage.

first hit to the figures i showed to be sure the formulas you have are correct. then you can check different scenarios...

[fickle]

I find it pointless to fret over retirement withdrawal in 30 years because I believe given the demographics, I believe taxation laws will be rewritten over the next 30 years. If the government decides there is too much wealth amassed in the ROTH system, they'll change the tax relationships.

We see people who worked 30 - 35 years needing to fund 35 years of retirement. They need to make adjustments in allocations in spite of their defined pensions since 10% interest rates disappeared. When Bond values eventually drop, bond holders will be selling and leaping into equities or some new product that we haven't seen yet.

I remember life before Smart phones and even when only a small percentage of folks had mobile phones; I expect change and know the one thing I can count on is change.

I've never owned a cell phone.

I know that everything changes, but we do invest with some thought of sense, don't we? If not, why don't we pick a 10% allocation for each of our 10 (hypothetical) choices and say: since no one can see the future, I will invest randomly.

I also find that deciding on a rational course that I've thought out helps me perceive when conditions have changed and I need to change course a little or a lot... even if my first "rational" choice isn't as perfect and scientific as I would hope.

It is interesting you mention bonds. I have only very recently started reading up on financial matters. One of the first things that struck me was that with interest rates so very low, wouldn't there be a shake-down in bonds when they rose again. But I knew I was a novice and wasn't sure of the validity of my concern at all. When I plug into retirement planners and read retirement planning truism (e.g. Age-20 = the %bonds that should be held for an "aggressive" investor), they all tell me I've too heavy in stocks. I read about "not timing the market", but I still have a nagging thought: now is not the time to sell stock and move into bonds. And by morning, after tossing and turning on the topic, I come limping to the internet, to my stack of recently-purchased books, and keep asking questions. But eventually, I will have to accept there is no Tarot reading to discover my best way forward. But that doesn't mean one doesn't at least *try* to flesh out a plan for now.

[smk]

there are times when you manage your positions and times when you just go along with the indices based upon the asset allocation you determine.

starting with the asset allocation, you match your assets against your future expenses which are largely impacted by inflation. you start with a riskless asset, say TIPs and see what you can live off of (e.g. you could use ESPlanner as probably the most correct on the market for the lowest price). then you can add some level of risky assets and make sure you are comfortable with the downside possibilities. you can also consider changes in lifestyle, how you take social security or a pension, etc. you need to study historical returns and get a sense for what you think might happen in the future. you set your allocation and CAN then just let it go.

alternatively, you could try to manage it actively by avoiding the REALLY big mistakes. you will not be able to avoid the small ones, so just accept them. if you have a system that is likely to produce slightly better returns than average over long periods of time, that is all you need. avoid swinging for the fences. your concern that bond rates are very low could fall into the camp of a really big mistake if you think rates will go up a lot in the future. active management if you have a good system would probably entail creating a bond latter when rates are higher so you only have a portion roll off each year to be reinvested. when you feel rates are way too low, you hold off on buying long term bonds and find a short-intermediate solution.

this is a synopsis of how the system works. yes, everything changes, but you can learn from thepast and plan for the future in some capacity...