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URL:  http://boards.fool.com/so-while-were-on-the-subject-of-diversification-20347779.aspx

Subject:  Re: Diversification Date:  2/18/2004  5:06 PM
Author:  rookieJoe Number:  39283 of 87442

So while were on the subject of diversification between accounts….

Do the rest of you adjust (based on expected tax rate) for whether or not the holdings are in a tax deferred account, or a tax free account?

Just as an example, if one has 10k in domestic stocks in a traditional IRA, and 10k in foreign stocks in a ROTH IRA… The effective allocation is not really 50% domestic / 50% foreign. In my mind, the only dollars that matter are the after tax dollars that go in my pocket. So if the expected tax rate during retirement is 25%, the allocation is really 43% domestic / 57 % foreign.

I use a spreadsheet to break my funds down into about 10 asset classes, then sum each of the asset classes and calculate percentages. I've considered adding in a multiplier to the spreadsheet to adjust everything into after tax dollars.

-Joe
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