Keep More of Your Wealth With Smart Investment Placement

The goal of tax-smart investing is simple: keep more of what you earn by limiting what’s lost to taxes. Most people think about which investments to choose, but what accounts those investments live in can quietly shape your after-tax results. 

What’s the difference between asset allocation and asset location? 

Most people are familiar with asset allocation, the mix of stocks, bonds, and cash that fits their goals and comfort with risk. Asset location is something different. It’s about which accounts (sometimes colloquially referred to as “buckets”) those investments live in. 

You probably already have a few different types of accounts — a 401(k), an IRA, and an investment account. Each is taxed differently. Using them in the right way together can make a real difference in what you keep after taxes. 

At Sachetta, this is not something you have to manage. Our advisors look at investments and taxes together and place your assets where they will be treated most efficiently. It is one of the quiet ways we help you keep more of what you earn over a lifetime. 

Which investments belong in which accounts for tax-efficient investing? 

Think of your accounts as three different “buckets,” each with its own tax rules. We take a thoughtful approach to where each type of investment lives. Clients are often surprised at how much difference it makes. The yearly savings may seem small, but over decades, those small wins add up. 

• This is your regular, non-retirement investment account.  

• Tax Rules: You may owe taxes each year on interest, dividends, or gains when you sell investments. 

• Investment focus: Investments that are naturally tax friendly, like index funds or municipal bond funds, where earnings are taxed at lower rates or may even be tax exempt. 

• Tax Rules: These are tax-deferred. You don’t pay taxes now, but you will later when you take withdrawals in retirement.  

• Investment focus: Investments that produce steady income, such as bond funds or real estate funds. Those can grow without creating yearly taxes. 

• Tax rules: These are tax-free. You pay the taxes up front when you contribute, so if you follow the rules, your withdrawals in retirement are tax free. 

• Investment focus: Investments with strong long-term growth potential, such as broad stock funds. If you meet the Roth rules, that growth can come out completely tax free later. 

Understanding these differences gives us a powerful planning opportunity. By matching the right investments to the right types of accounts, we can reduce taxes that quietly chip away at your wealth over time. 

What is the benefit of tax-smart asset location versus the same mix in every account? 

Coordinating where each investment lives can add about 0.05% to 0.30% to after-tax returns each year, depending on your accounts and investment mix. It may sound small, but those gains compound to make a meaningful difference over time.  

Some wealth management firms make every account hold the same mix of investments because it’s simple to manage. The problem is that each account is taxed differently. A coordinated, tax-smart approach looks at your whole household and places investments where the tax rules work in your favor. 

At Sachetta, tax planning (often tax planning for retirement) is at the center of everything we do. Preparing and filing clients’ tax returns is included in our wealth management service. That’s not just a convenience; it’s what allows us to see your full financial picture and plan proactively. With that insight, we can plan Roth conversions at the right time, choose which accounts to draw from first in retirement, time gains and losses thoughtfully, and watch for issues that can raise your tax bill. All of these can save you money in taxes over the years.  

Can small annual gains really add up? 

Yes. Here’s a simple example:

Disclaimer: Individual results will vary based on account performance, applicable taxes and other individual factors.

How does tax-smart asset location support long-term peace of mind? 

This is not about squeezing every dollar out of the market. It’s about aligning your investments with your life by reducing friction, avoiding surprises, and keeping more of what you’ve built. 

We revisit your account structure as tax laws and your goals evolve. You don’t need to manage the details or worry about jargony acronyms like NIIT or IRMAA. We handle that for you. 

It’s one of the many ways we help clients grow and protect wealth — calmly, deliberately, and always with your long-term peace of mind in focus. 

Want to see how your accounts are working together, tax-wise? 

Schedule a conversation with our team. Strategies like asset location are where professional advice adds quiet value over time. Coordinating investments and taxes across accounts helps you keep more of what you earn to strengthen your financial future.