Bogleheads:Featured article/Tax-efficient fund placement

All investors must pay their fair share of taxes. Investors should also know that 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 is affected by both its expected return and the tax rate on such return.

Determination of your asset allocation (% stocks / % bonds), which sets your portfolio's level of acceptable risk, is the single most influential decision you can make on your portfolio's performance. Only consider taxes after you have configured your total portfolio. (more...)