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Investing Specialists

When Should You Save in a Taxable Account?

Asset location matters, but taxable accounts can be the way to go.

Even newbie investors are probably somewhat knowledgeable about the importance of investing heavily in tax-sheltered vehicles--IRAs and company-retirement plans. Taking advantage of tax-deferred compounding--or even tax-free compounding, in the case of Roth vehicles-- is one of the easiest ways for investors to improve their bottom lines.

Yet as meaningful as those tax savings can be, there are also situations when saving in your taxable account is the right way to go because practical considerations outweigh the tax hit you'll take to do so. Here are some of the key occasions when saving within the confines of a taxable account makes sense, even though it could cost you a bit more in taxes from year to year.