Put It Where?

Physician's Money Digest, October31 2003, Volume 10, Issue 20

Deciding how to divvy up assetsbetween taxable and tax-deferred accountshas always been confusing, andthe new tax law hasn't made it any easier.Some of the rules of the game havedefinitely changed. A few rules of thumbare in order. In tax-deferred accounts,you should keep assets that throw offinterest, like bond funds. Junk bondfunds and real estate investment trustfunds, where your gains generally don'tqualify for the new dividend-income taxbreaks, belong there too. Mutual fundsthat generate a lot of short-term capitalgains also belong in a tax-deferredaccount. In a taxable account, keep dividend-heavy stocks that you intend tohold for a year, as well as stock indexfunds. Your taxable account is the placeto park tax-exempt municipal bonds andmunicipal-bond funds.