Get Your Free Financial Score →Sign InYour data on this device
Free · Open access · No sign-up required
LearnFAQTax Optimization

Which investments should I keep in my taxable account versus my retirement accounts?

Answer

The general asset-location rule: put tax-inefficient assets in tax-sheltered accounts and tax-efficient ones in taxable. Bonds, REITs, actively managed funds with high turnover, and anything throwing off ordinary income belong in a traditional IRA or 401(k) where that income isn't taxed yearly. Broad stock index funds and ETFs, which are tax-efficient and generate mostly qualified dividends and long-term gains, work well in a taxable brokerage. Assets with the highest expected growth, like aggressive stock funds, are often best in a Roth so all that growth escapes tax forever. The goal is minimizing your total after-tax return across all accounts, treating them as one portfolio. Use the Tax Strategies tool at wealthserene.com/tools/tax-strategies to map your placement.

← All FAQsMore Articles →

Educational disclaimer: All content on WealthSerene.com is for educational purposes only and does not constitute investment advice. Projections and calculations are illustrative — actual results will vary based on market conditions, your specific situation, and many factors outside this tool’s scope. Always consult a qualified financial professional for advice specific to your situation. View full disclosures →