What assets should you hold in each account to minimize taxes?

Hack Your Wealth

#62: It might seem obvious that the best performing car isn’t just a function of the car itself…but also WHERE you’re driving it.

Ferraris vs. Hummers will perform best in very different environments.

When it comes to asset management, a similar thing is true.

A few episodes back, I did a 3-part series on asset allocation. However, asset allocation is only part of the puzzle to optimizing your portfolio.

To maximize total after-tax returns, WHERE you hold your assets is just as important as WHAT assets you hold.

Asset allocation is WHAT you hold.

Asset location is WHERE you hold it.

You have to make sure you drive the Ferrari vs. the Hummer on appropriate terrains.

Asset location strategy is about holding the right asset classes in the right accounts bearing the right tax profile.

The goal is to minimize taxes on the way in, minimize tax drag while you invest, and minimize tax liability upon withdrawal.

How do you do this?

This week, I talk with Jonathan Duong, CFA, about how to manage your asset location to be as tax-efficient as possible. (This is part 1 of a 2-part discussion.)

In addition to best practices and general principles, we discuss optimal asset location for:

• Stock holdings (both indexes and individual stocks, both dividend and non-dividend paying)
• Non-tax exempt bond holdings
• Tax-exempt bonds
• REITS
• Physical real estate

Check it out here:

https://hackyourwealth.com/asset-location-part-1
What asset location principles are most relevant to you? Let me know by leaving a comment.

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Links mentioned in this episode:

• Wealth Engineers
• Financial planning software: eMoney, Advyzon, Covisum
• How to set your target asset allocation and rebalance your portfolio efficiently (HYW058)
• Schedule a private 1:1 consultation with me
• HYW private Facebook community

Intro/Outro: Old Bossa by Twin Musicom.