Finance Guy: Asset location
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Asset location is about maximizing your tax advantages by placing assets under vehicles that minimize tax exposure.
For instance, if your total portfolio is $500,000 and your asset allocation is 50 percent stocks and 50 percent cash, it would make sense if you can hold your investable cash and bonds in an IRA, 401(k) or Roth.
Any interest-bearing account that throws off taxable interest can therefore be sheltered from taxation.
The half your portfolio that is not interest-bearing, but rather is made of capital gains property, should be accumulated outside of tax shelter, taking advantage of favorable capital gains tax laws.
Do not forget tax paid cash as you're accumulating money for retirement. Having buckets of tax-paid dollars, tax-sheltered dollars and some tax-free exposure to Roth IRAs is a wonderful circumstance come retirement time.