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Investing/Strategies / Retirement Investing
|Subject: Re: Honest IRA/Roth Comparisons||Date: 3/27/1998 9:32 AM|
|Author: TMFPixy||Number: 2422 of 83147|
Greetings, Vsaffrin, and welcome.
<<I'm mystified about the Roth hubbub, but maybe I'm just missing the boat.
When I try to compare a traditional IRA to a Roth, the Roth ALWAYS comes out behind. That's because I insist on comparing apples to apples and equate a $2K pre-tax contribution to a traditional IRA with a $1440 Roth contribution (taking account of the fact that I will need to pay an additional $560 of taxes @28% on the now-taxable money). The Roth never recovers from this lower input, regardless of assumed investment returns or time horizons. The larger pie earns more money, and wins even though I have to pay taxes when withdrawing money...there's more than 28% more money at the end.
Comparing the returns on $2K contributions to both plans just isn't honest (and therefore not Foolish).
So, other than inheritance differences, why should I even consider a Roth?>>
I made a post on these issues on 1/31/98. It was put into a readable format, and it's worth your consideration and time. You can find it at:
Take a look. Then if you have further questions, c'mon back and ask.
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