Tax-efficient investing in plain English
You can't control the markets, but you can control how much of your returns you keep. Tax-efficient investing is one of the highest-leverage things most people ignore.
Use tax-advantaged accounts first
401(k), Roth IRA, HSA, 529. Each one shelters investments from some or all taxes. Generally the order is: 401(k) up to match → HSA if eligible → Roth IRA → 401(k) to the limit → taxable brokerage.
Place assets thoughtfully
Bonds and high-dividend funds throw off taxable income each year, so hold them in tax-sheltered accounts. Index funds and ETFs are tax-efficient by design and work fine in taxable brokerage accounts.
Harvest losses, defer gains
In taxable accounts, selling losing positions to offset gains (tax-loss harvesting) can save real money. Holding investments more than a year qualifies you for long-term capital gains rates, which are lower than ordinary income rates.
Walk through the order, one account at a time.
Tax-advantaged accounts compound faster than taxable ones, but only if you use them in the right order. Tick off what you have. We'll show you what's next.
Insight
Your next move is "401(k) up to the employer match". Instant 50–100% return. Nothing else comes close.