Tune Up Your Taxable Portfolio
Here's how to limit Uncle Sam's cut of your investment returns.
In my experience, investors often give short shrift to the question of what to put in their taxable accounts versus their tax-sheltered accounts. They focus almost entirely on asset allocation (finding the right stock/bond mix for a particular goal) and security selection but pay less attention to which types of assets go where, often called asset location.
As a result, they needlessly surrender a big portion of their gains to the tax collector each year. That can be a particularly big problem for young and middle-aged investors. If the government is taking a large cut of your investment returns each year, your savings have less of an opportunity to compound over time.
Christine Benz has a position in the following securities mentioned above: VTMGX. Find out about Morningstar’s editorial policies.