The answer to this question depends on many variables, including stock and bond returns, your investment timeline, your tax rate, your future contributions, your withdrawal strategy, etc. So I'm using the following assumptions:
- stock return: 2% qualified dividends + 8% appreciation
- bond return: 3% non-qualified dividends + 0% appreciation
- investment timeline: 30 years
- tax rate: 15% on qualified dividends, 22% on non-qualified dividends
Using Excel you can calculate the end balance quickly.
Stocks in Roth, bonds in taxable
- stocks in Roth:
- bonds in taxable:
- total: $194,509.34
Stocks in taxable, bonds in Roth
- stocks in taxable:
- bonds in Roth:
- total: $185,040.34
The stocks in Roth, bonds in taxable strategy gives you a larger overall balance, but also leaves you in a better position to make withdrawals. With the majority of your money in Roth, you can take money out with no tax consequences. The downside is your Roth money is effectively locked up until age 59.5.
Also note this analysis does not consider rebalancing to maintain your 50/50 asset allocation, which could change the conclusions.