Question about IRA's:

[progree]

15. I'm 69, so am also not looking at a very long time frame for compounding my money!

nor do we have a lot of years for recovering from a big stock market crash.

Right now, as far as investable assets, I'm maybe 55% in equities (mostly index funds) and 45% in bond funds.

On the equities, I believe the long-term historic results are so much superior to bonds or other fixed income. I recognize that valuations are way high compared to historic, but a lot of that is because interest rates are so low low, so people looking for any kind of return above nominal are forced to invest in stocks, thus the high P/E ratios. So I think they might not be overvalued much, at current interest rates.

But if interest rates go up in a serious and sustained way, than the above justification for the high equity P/E ratio dwindles. So that's very scary.

Post WWII, U.S. stock market has crashed a number of times, but has gotten back to where it was in like 8 years or less. I think people are seeing it as a safe buy-and-hold investment if they can hold on for 8 or so years, and that is helping to cause the high valuations. I am mindful though that it took the Dow about 16 years to regain its 1966 peak.

And the Nikkei was 38,916 at the end of 1989 and 7,055 in 2009, and about 28,000 now, so they haven't fully recovered their losses 30+ years later. And pity the poor person who needed their money in 2009.

My bond funds are yielding between 1.5% to 2.2%. It's sad to see such a weak return on 45% of my investable assets. But I just don't have the stomach to have it all in equities, and risk losing it all

I've written in a couple of posts that contributing to a Roth IRA -- compared to doing nothing and letting the money sit in a taxable account -- is a no-brainer if one doesn't run afoul of the early withdrawal rules.

But the decision to convert traditional IRA money to a Roth IRA is a different thing entirely, definitely NOT a no-brainer. But I tend to believe that if one's tax rate in the year of conversion is lower or the same as in the year of withdrawal, that the Roth usually comes out better.