What are the best type of mutual funds to hold in a taxable investment account?
I have a balanced account that includes bonds and various classifications of mutual funds. What are the most tax efficient to be held in a taxable account?
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- Among stock funds, broad-market index funds and tax-managed funds are generally tax-efficient because they typically generate lower levels of capital gains, short- or long-term. For bonds you want municipal bond funds, preferably in the state you live in.
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