Course 205: The Best Investments for Tax-Deferred Accounts
Rules of Thumb
In this course
1 Introduction
2 The Old and New Approaches
3 Rules of Thumb
4 Conditions

You can draw a handful of conclusions from the findings of these studies.

  • The higher your tax bracket in retirement and the shorter your time horizon until retirement, the more you are likely to benefit from holding stocks in taxable accounts and bonds in tax-deferred accounts.
  • If you are 15 years or more away from retiring and you expect to be in a lower tax bracket upon retirement, hold stocks in your tax-deferred accounts and bonds in your taxable account.
  • If you are less than 15 years away from retiring and you expect to be in a higher tax bracket upon retirement, hold stocks in your taxable account and bonds in your tax-deferred accounts.
  • Because the Roth IRA allows you to withdraw money in the future with no tax consequences at all (providing you meet the requirements), hold stocks in your Roth IRA.

Next: Conditions >>


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