The type of account that holds your investments can make a big difference when it comes to maximizing your after-tax returns – taxable vs. tax-deferred accounts.
If you have money in both taxable and tax-deferred accounts, then an asset location strategy may be right for you when it comes to optimizing your after-tax investment performance.
For example, some investments may be more suitable for a taxable account like low turnover funds (ETFs and mutual funds), growth stocks that reinvest dividends rather than pay them out to the investor and municipal bonds that pay out tax-free interest income. These types of investments generally experience low tax consequences and may be best positioned in a taxable account.
On the other hand, some investments may be more suitable for tax-deferred accounts (IRA or Roth) like fully taxable bonds and bond funds, preferred stocks or higher turnover investment funds that create larger amounts of realized short-term gains.
At PNC Investments, we feature a program called Multi-Account Management that can help you determine how to allocate your overall investment portfolio across your taxable and tax-deferred accounts to help remain diversified and tax-efficient.
Markets & Economy
Where assets are invested matters more than one would realize. Learn more about the importance of asset location and how it can benefit your retirement plan.
7 min read
Neither PNC Investments nor your Financial Advisor provide tax advice. You should review your tax situation with your own independent tax professional to fully evaluate how you may benefit.
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