Classifieds

By Nellie S. Huang
From Kiplinger’s Personal Finance
Which investments you hold matters, but so, too, does where you hold them, whether it's in a tax-advantaged account or a taxable one.
The strategy of divvying up your assets into certain types of accounts to lower your tax bill is called asset location. The general advice is to hold less-tax-efficient investments in tax-sheltered or tax-free accounts and to put tax-efficient assets in a taxable account.
Tax-Deferred Accounts
In a tax-deferred account, such as a traditional IRA or 401(k), you sock away money pretax and it grows tax free. You'll pay income tax on the money only when you withdraw it....