The above exceptions notwithstanding, there are compelling reasons to hold stocks in your taxable rather than tax-sheltered accounts.
As noted earlier, long-term capital gains, which is what you have when you sell a stock that you've held for at least a year, are taxed at a much lower rate than is bond income—consult the IRS’ web site for current long-term capital gains tax rates by income-tax bracket.
Another key reason to hold stock in your taxable accounts is that stock investors can also exert a higher level of control over the receipt of capital gains than bond investors--for example, by buying and holding individual stocks or by investing in exchange-traded funds, which have a built-in mechanism for limiting taxable capital gains payouts. Tax-managed funds and traditional broad-market stock-index funds also tend to do a good job of keeping the lid on distributing capital gains
Either Account = Lower Returners With High Tax Costs >>