" the traditional asset location strategy “rule of thumb” is that tax-inefficient bonds go into an IRA, while equities eligible for preferential tax rates go into a brokerage account, the reality is that for investors with long time horizons the optimal solution may be the opposite. Once stock dividends and portfolio turnover are considered, the ongoing “tax drag” of the portfolio can be so damaging to long-term returns that placing equities into an IRA may be more efficient, even though they are ultimately taxed at higher rates!
In fact, it turns out that almost any level of portfolio turnover will eventually tilt equities towards being held in IRAs given a long enough time horizon (and especially while today’s low interest rates result in almost no benefit for bonds to gain tax-deferred growth inside of retirement accounts). Which means in the end, good asset location decisions depend not only on returns and tax efficiency, but an investor’s time horizon as well!"
https://www.kitces.com/blog/asset-locat ... e-horizon/
also not all index funds have the same tax efficiency .. most are not like spy which is the purest form in structure ...some dont own the index as is they swap minor stocks around , some loan equities out or buy and sell calls ... this list is an older list and the numbers have changed but it shows you even being an index fund the fund can have a pretty poor tax efficiency .
