Bogleheads:Featured article/Tax-efficient fund placement

Tax-efficient fund placement is an issue facing investors holding assets in multiple accounts, both tax-advantaged and taxable accounts. The tax code recognizes different sources of investment income which are taxed at different rates, or, are taxed at a later time (tax "deferred"). An asset's tax efficiency (the impact of taxes on an investment) is affected by both its expected return and the tax rate on that return.

All investors must pay their legally required taxes. This article describes how to minimize taxes by placing investments appropriately in tax-deferred or taxable (pay taxes now) accounts. (more...)