Robert M. Dammon, Carnegie Mellon University
James Poterba, Massachusetts Institute of Technology
Chester S. Spatt, Carnegie Mellon University
Harold H. Zhang, University of Texas at Dallas
October 2005 | Issue # 85
In this article, academic researchers discuss the advantages of placing equities in taxable accounts and taxable bonds in tax-deferred accounts in order to maximize the tax efficiency of one’s overall portfolio. Robert Dammon, Chester Spatt, and Harold Zhang co-authored a paper on this topic of asset location that won the 2004 TIAA-CREF Paul A. Samuelson Award. Their research indicates that the relative proportions of taxable and tax-deferred wealth affect one's overall optimal asset allocation. James Poterba also has researched asset location issues such as different investment horizons and different tax rates during accumulation and distribution phases. The four academic researchers discuss their findings and implications for individual investors in an interview with TIAA-CREF Institute Associate Director Mimi Lord.