The Stock-Bond Shuffle of Asset Location

It's a well-used strategy to help minimize taxes. Take a look at how it works.

(Image credit: Kyle Sparks (C) 2007 (Kyle Sparks (C) 2007 (Photographer) - [None])

Asset location is placing specific securities in specific types of accounts to maximize after-tax returns. This strategy can boost after-tax returns by as much as 1%. When we rebalance a client’s portfolio, we rebalance all of their accounts’ holdings aggregated together. This means each trade is an opportunity to optimize which holdings are in each account type.

SEE ALSO: 10 Timeless Investing Principles

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President, Marotta Wealth Management

David John Marotta is the president of Marotta Wealth Management. David earned a master's degree in computer science from the University of Oregon and a B.A. in philosophy and electrical engineering from Stanford University.