I have an account with Vanguard. I have a Roth IRA, Rollover IRA (from my 401k from a previous job), and I have a standard non-tax-advantaged account. Currently, all 3 accounts are fully Vanguard Total Stock Market Index Fund Admiral Shares.

To the question: is it best to do bonds or stocks in the tax advantaged accounts? Should I go full bond, or some self-balancing account like Vanguard Target Retirement 2060 Fund?

  • You have two questions: what is the asset allocation that meets your personal risk tolerance, investment philosophy and 12 year retirement goal; and given an asset allocation, how to use tax advantaged account for maximum tactical benefit.
    – user662852
    Feb 5, 2016 at 17:36
  • @user662852 ok, I changed the question to be more on point with the original question
    – Timotheus
    Feb 5, 2016 at 18:36

1 Answer 1


You should definitely favor holding bonds in tax-advantaged accounts, because bonds are not tax-efficient. The reason is that more of their value comes in the form of regular, periodic distributions, rather than an increase in value as is the case with stocks or stock funds. With stocks, you can choose to realize all that appreciation when it is most advantageous for you from a tax perspective. Additionally, stock dividends often receive lower tax rates.

For much more detail, see Tax-efficient fund placement.

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