top of page

Asset Location


Asset Location in your Portfolio
Asset Location in your Portfolio

Asset location is a smart way to organize your investments across different account types (like taxable brokerage accounts, Traditional IRAs, and 401(k)s) to potentially lower the taxes you pay and increase your after-tax returns. The main idea is to put certain investments in accounts where they'll be taxed less or not at all.


For example, investments that generate taxable income, such as taxable bonds and international bonds, are often placed in tax-advantaged accounts like Traditional IRAs or 401(k)s, and sometimes even Roth IRAs.


Let's illustrate this with an example. Imagine you have $1 million, with $500,000 in a taxable brokerage account and $500,000 in a Traditional IRA. You've decided on a 50/50 split between stocks (equities) and bonds (fixed income).


With asset location, you would likely put all your stocks ($500,000) in your taxable brokerage account and all your bonds ($500,000) in your Traditional IRA.


Now, let's see why this might be better than simply splitting each account 50/50. If you split each account, you'd have $250,000 in bonds in your taxable account. Let's say those bonds earn 5% interest per year, which is $12,500. If you're in a 35% ordinary income tax bracket, you'd pay $4,375 in taxes on that interest just for holding the bonds in your taxable account.


Beyond bonds, you might also consider holding other higher-yielding, potentially more tax-inefficient investments like REITs (Real Estate Investment Trusts) or MLPs (Master Limited Partnerships) within your tax-sheltered accounts to further reduce your tax bill.

It's important to remember that your investment goals should always come first. This asset location strategy works best when all your accounts are aligned with the same long-term goal, like retirement. For instance, if retirement is 40 years away, but you're also saving for a second home in the next 10-12 years, you should prioritize investing appropriately for each of those goals, even if it means not being as tax-efficient.


Also, keep in mind the rules of each account type. You usually can't easily access funds from a 401(k) while you're still working, and early withdrawals from an IRA might come with penalties unless certain exceptions apply. Your life and financial goals can change, so staying flexible with your strategy is key.


While asset location can be a valuable tool for saving on taxes, it's just one piece of the puzzle. If you have questions or concerns about how this strategy fits into your overall investment and tax plan, please click the link to Schedule a Free Consultation.


Disclaimer

Investment advice offered through Stratos Wealth Advisors, LLC, a registered investment advisor. Stratos Wealth Advisors and Synergy Wealth Management are separate entities. 

Stratos or Synergy Wealth Management does not provide tax or legal services. Please consult legal or tax professionals for specific information regarding your individual situation.

These examples provide certain potential financial strategies that are based on various assumptions and are therefore hypothetical in nature and not guarantees of investment returns. You should consult your tax and/or legal advisor before implementing any transactions and/or strategies concerning your finances

Subscribe and get my blog articles sent to your email address • Don’t miss out!

ความคิดเห็น


Synergy White Logo - Ronald Taraborrelli

10,000 Lincoln Drive East, Suite 201
Marlton, NJ, 08053

Phone: (856) 562-8800

STRATOS FORM CRS

​​​Privacy Policy

Accessibility Statement

​​

Investment advice offered through Stratos Wealth Advisors, LLC, a registered investment advisor. Stratos Wealth Advisors, LLC and Synergy Wealth Management are separate entities.

 

The Synergy Wealth Management site is limited to the dissemination of general information pertaining to its services, together with access to additional investment-related information, publications, and links. Accordingly, the publication of the Synergy Wealth Management web site on the Internet should not be construed by any consumer and/or prospective client as a solicitation by Synergy Wealth Management to effect, or attempt to effect transactions in securities, or the rendering of personalized investment advice for compensation, over the Internet. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly.

 

The Synergy Wealth Management's website and its associated links offer news, commentary, and generalized research, and should not be construed as personalized investment advice.
Past performance is not necessarily indicative of future results and there is no assurance that the investment objective will be achieved or that the strategies employed will be successful. All investments involve risk including loss of principal and unless otherwise stated, are not guaranteed.


The contents of the Site may contain forward-looking statements that are based on The Synergy Wealth Management’s beliefs, assumptions, current expectations, estimates, and projections about the financial industry, the economy. Statements and views are subject to change without notice. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict with regard to timing, extent, likelihood and degree of occurrence. Therefore, actual results and outcomes may materially differ from what may be expressed or forecasted in such forward-looking statements.

 

Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment or investment strategy (including those undertaken or recommended Stratos), will be profitable or equal any historical performance level(s). Due to various factors, including changing market conditions, such discussion may no longer be reflective of current position(s) and/or recommendation(s). If you have any questions regarding the information on this website, please consult with your financial advisor.  No strategy assures success or protects against loss.

Fidelity Investments® (“Fidelity”) is an independent company, unaffiliated with your advisor. There is no form of legal partnership, agency affiliation, or similar relationship between your financial advisor and Fidelity, nor is such a relationship created or implied by the information herein. Fidelity has not been involved with the preparation of the content supplied by your advisor and does not guarantee, or assume any responsibility for, its content. Fidelity Investments is a registered trademark of FMR LLC. Fidelity provides clearing, custody, or other brokerage services through National Financial Services LLC or Fidelity Brokerage Services LLC, Members NYSE, SIPC. 1171392.1.0

​​

bottom of page