Linda Lubitz Boone, CFP®
April 7, 2023

Investors are often preoccupied with generating attractive returns and managing risk in their portfolios. However, one aspect that should not be overlooked is the tax efficiency of our investments. Diversified portfolios hold a wide range of investments with different asset classes/securities having different return and tax efficiency characteristics. Tax-efficient asset class placement can have a significant impact on long-term wealth accumulation and should be an integral part of any investor’s strategy. This is a strategy that we, at Meira, have regularly used over the years.

Why Tax Efficiency Matters: The primary goal of tax-efficient asset class placement is to minimize the tax burden associated with investment returns. By strategically locating investments in the appropriate account types, such as taxable (e.g., a brokerage account), tax-deferred (e.g., an IRA or 401K/403B account), or tax-free accounts (e.g., Roth IRA account), we can potentially maximize after-tax returns and enhance our wealth accumulation over time. Several well-regarded studies—especially one in 2013 by Blanchett & Kaplan—demonstrate that an investor could expect an additional 23 basis points of return by utilizing an asset location strategy (see definition below).

Michael Kitces, one of our profession’s thought leaders, suggests the following key principles to consider for tax-efficient asset class placement:

Source: Michael Kitces FPA 2017 NorCal Conference

We believe that tax-efficient asset class placement is a critical component of successful portfolio management. By considering the tax implications of different asset classes and strategically locating investments across various account types, you can enhance after-tax returns and potentially achieve your long-term financial goals more efficiently. One of our goals in managing our clients’ investment portfolios is to use a tailored strategy that optimizes tax efficiency—helping our clients to minimize unnecessary tax burdens, where possible, and keep more of their hard-earned wealth in-hand.

Clint McCalla, CFP®
Senior Client Advisor
January 16, 2024
Important Tax Updates for 2024
As tax season gets underway, please take a moment to review the included tax resource from the MEIRA Wealth team which reflects important updates for the 2024 tax year.
Rubina Hossain, CFP®
Client Advisor
March 4, 2024
My Work with the CFP Board
Did I ever imagine that I would willingly undertake the CFP® exam three times a year for the next five years? Suprisingly, it happened...
Linda Lubitz Boone, CFP®
October 18, 2023
Do You Know Someone Who is Living With Dementia?
Do you know someone who is living with Dementia? Or, do you think one day you may be a caregiver for someone who has Dementia—perhaps a parent, sibling or close friend? Or, do you believe your children may need to be a caregiver for you one day? We've created our Dementia and Caregiver Educational Series to help provide you with tools you'll need to face these challenges.
View all insights
We're committed partners, working alongside our clients to illuminate possibilities, create a financial roadmap, and help them pursue a quality life, reimagined.
Let's talk

Reimagining life's defining financial moments.  Together.®

LinkedIn Social Share Icon
(305) 670-4448
LinkedIn Social Share Icon