Conclusions
The broad consensus is that households can raise their after-tax wealth by holding highly taxed assets in their tax deferred account, and lightly taxed assets outside, but the specific asset location choices will vary depending on taxation policy, tax and income level, and the degree of stock capital gain compounding. The consensus breaks down when deciding how to do this.
One school of thought advocates putting higher-return assets (such as stocks) in the tax-advantaged accounts. The other proposes locating tax-inefficient assets (such as bonds and real estate investment trusts) in the tax-advantaged accounts. Although this is an evolving debate, the best and most current critical thinking supports sheltering the tax-inefficient assets in the tax-advantaged accounts.
Read more about this topic: Asset Location
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