ETF Specialist

Reduce Taxes With Strategic Asset Location

Alex Bryan, CFA

A version of this report was published in the March 2018 issue of ETFInvestor.

Taxes are no fun. They may be an inevitable part of life, but savvy investment planning can reduce their impact. This type of planning requires holistic thinking about all your assets, considering asset allocation not only across asset classes and investment strategies but also across investment accounts. Tax-sheltered accounts, like 401(k)s, IRAs, and health savings accounts, are a good place to park less tax-efficient investments, like taxable-bond, dividend, and actively managed funds. Taxable accounts should be reserved for more-tax-efficient strategies, including low-turnover equity index funds.