Implementation Guide

Account Placement Strategy

Why Placement Matters

You've classified your holdings by role. Now you need to decide which accounts should hold which roles. This matters because different account types have different tax treatment and different roles generate different types of taxable events.

Getting placement right can save you thousands of dollars in taxes over time.

The Three Account Types

Taxable (Brokerage) Accounts

• Tax treatment: Dividends and interest taxed annually; capital gains taxed when sold
• Qualified dividends: Taxed at lower long-term capital gains rates (0%, 15% or 20%)
• Ordinary dividends/interest: Taxed at ordinary income rates (up to 37%)
• Withdrawals: No restrictions or penalties at any age

Tax-Deferred Accounts (Traditional 401k, Traditional IRA)

• Tax treatment: No tax on dividends, interest or gains while invested
• Withdrawals: Taxed as ordinary income when withdrawn
• Restrictions: 10% penalty if withdrawn before age 59½
• RMDs: Required minimum distributions starting at age 73

Tax-Free Accounts (Roth IRA, Roth 401k)

• Tax treatment: No tax on dividends, interest or gains while invested
• Withdrawals: Completely tax-free after age 59½
• No RMDs: You never have to take distributions

Critical Distinctions

Tax-Free (Roth) vs Tax-Exempt (Muni Bonds)

These terms sound similar but mean completely different things:

Tax-Free Account (Roth)	Tax-Exempt Income (Muni Bonds)
The account shields all gains/income from tax	The bond's interest is exempt from federal tax
Any asset in a Roth grows tax-free	Only muni bond interest is tax-exempt
Withdrawals after 59½ are tax-free	Principal gains are still taxable

Key insight: Muni bonds belong in taxable accounts where their tax-exempt status matters. In a Roth or traditional IRA, their tax advantage is wasted because everything is already tax-advantaged.

Qualified vs Ordinary Dividends

• Qualified dividends: Taxed at 0%, 15% or 20% (same as long-term capital gains)
• Ordinary dividends: Taxed at ordinary income rates (up to 37%)

Most US stock dividends are qualified. REITs, preferred stocks and some bond funds pay ordinary dividends. This affects placement strategy.

General Placement Principles

Tax-Inefficient Assets → Tax-Deferred Accounts

Assets that generate lots of taxable income:

• Taxable bond funds (corporate bonds, Treasury bonds)
• High-yield bond funds
• Preferred stock funds (ordinary dividends)
• REITs (ordinary dividends)

Tax-Efficient Assets → Taxable Accounts

Assets that generate minimal annual tax:

• Broad index equity funds (low turnover, qualified dividends)
• Growth stocks (no/low dividends)
• Municipal bonds (tax-exempt interest)
• Tax-managed funds

Highest Growth Potential → Roth Accounts

• Growth equity funds
• Small-cap funds
• International stocks (long-term growth potential)
• Individual stocks with high growth expectations

Role-Specific Placement Guidance

Fixed Income Roles

Liquidity Reserve: Taxable accounts (need immediate access). Exception: If in retirement and using for regular spending, can be in tax-deferred.

Capital Preservation: Depends on bond type. Municipal bonds in taxable (tax-exempt interest). Treasury bonds in either (slight preference for taxable). Corporate bonds in tax-deferred (taxable interest). CDs usually taxable.

Core Income: Tax-deferred preferred (bond funds generate taxable interest). Exception: Municipal bond funds belong in taxable accounts.

Broad Exposure: Tax-deferred preferred. Reality check: If tax-deferred space is limited, taxable is fine.

Enhanced Income (Preferreds): Tax-deferred strongly preferred (ordinary dividends taxed at high rates).

Equity Roles

Core Equity: Anywhere (very tax-efficient). International consideration: International funds generate foreign tax credits that only help in taxable accounts.

Defensive/Dividend: Tax-deferred or taxable depends. If qualified dividends, taxable is fine. If high dividend yield, tax-deferred preferred.

Growth Equity: Roth (ideal) or taxable. Growth stocks have low/no dividends, so minimal tax drag in taxable. But Roth captures tax-free growth.

Thematic/Opportunistic: Depends on turnover. High turnover in tax-deferred. Buy-and-hold individual stocks in taxable. Sector ETFs usually taxable-friendly.

Real-World Constraints

Perfect tax placement assumes you have unlimited space in all three account types. Reality is messier.

Limited 401k options: Work with what you have. Use your IRA and taxable accounts to optimize around 401k constraints.

Account size imbalances: You can't fit everything perfectly. Prioritize the highest-growth or longest-horizon equity in the Roth.

When to compromise: Tax placement is an optimization, not a requirement. A good enough placement that you can maintain beats a perfect placement you may abandon.

Placement Decision Workflow

When deciding where to place a new purchase or where to move existing holdings:

1. Identify the role. What job does this holding do?
2. Assess tax efficiency. Does it generate lots of taxable income annually?
3. Check account constraints. What accounts do you have access to? What are their sizes?
4. Apply the priority:
   • Tax-inefficient → tax-deferred
   • Highest growth → Roth
   • Tax-efficient → taxable
5. Make peace with compromise. If you can't place it perfectly, place it well enough and move on.

The Schema

The data structure that implements the methodology

What the Schema Is

The schema is the structured data model that implements the role-based methodology. While the methodology is the conceptual framework (the thinking), the schema is the technical specification (the data structure).

The schema defines:

• What fields/columns track each holding
• How roles and lenses are stored
• What lookup tables support classification
• How accounts and tax types are tracked

Core Components

AssetLookup Table

Your AssetLookup table is the source of truth for all classifications. This is where you define what each asset does in your portfolio.

Broker imports are temporary and disposable. Your broker tells you what you own and how much it's worth. AssetLookup tells you why you own it.

Ticker/Name	Category	Primary Role	Geography	Notes
VTI	Equity	Core Equity	US	Total US market
VXUS	Equity	Core Equity	International	Total ex-US
BND	Fixed Income	Broad Exposure	US	Total bond market
SCHD	Equity	Defensive/Dividend	US	Quality dividend focus
SPAXX	Fixed Income	Liquidity Reserve	US	Emergency fund

YieldLookup Table

For assets in your Income Engine (Analytics page), the YieldLookup table stores current yield data. This can be manually entered or imported from services like Track Your Dividends.

AccountsLookup Table

Maps your actual account names to standardized tax categories (Taxable, Tax-Deferred, Tax-Free).

Important Schema Notes

Lenses Are Analysis Views

The schema supports multiple analytical lenses:

• Income Engine lens: Across all assets (FI and Equity)
• Sector lens: Equity/Thematic only
• International lens: Across FI and Equity

Summary Philosophy

The schema's summary sections use a high-level → drill-down pattern. You see the top-level breakdown first, then can dive into specific details. The summaries help you track goals and plan decisions.

What the Schema Does NOT Track

• Current market values (that's your broker statements)
• Cost basis or unrealized gains
• Performance metrics
• Historical purchases/sales

It's a classification reference, not a portfolio tracker. Your bank and broker track values and performance. The schema tracks intent.

Using the Portfolio File

About the Portfolio File

The Portfolio File is a Google Sheets implementation of the schema. It's the executable tool that brings the methodology to life. You can download and use this file to track your own portfolio using the role-based classification system.

The file includes:

• Pre-configured lookup tables (AssetLookup, YieldLookup, AccountsLookup)
• Import templates for broker data
• Summary calculations and reports
• Income Engine tracking

Typical Workflow

Step 1: Export from Your Accounts

For each account, export your holdings data. You need: account name, asset ticker or name, description, quantity and market value.

Step 2: Paste into Portfolio Sheet

Set columns A:E on the Portfolio sheet to Account, Asset, Description, QTY, Market Value. Paste data from each account export.

Step 3: Update Lookup Tables

AssetLookup: Add any new tickers that show up as errors. Define their Category, Primary Role and other attributes.

YieldLookup: Update yield data for Income Engine assets.

AccountsLookup: Update with your actual account names and tax status.

Google Sheets Specifics

Google Finance Limitations

The file uses Google Finance lookups and arrayformula (dependencies). Important limitation: Google Finance sometimes doesn't work for funds and some holdings - if a field is always blank, you must fill it in manually or debug the lookup.

Some assets are never available through Google Finance. You'll need to manually maintain these.

Formula Dependencies

Summary sections were set up with original list values and column locations. Warning: Modifications to sheet structure could break reporting. Don't rearrange columns unless you plan on updating formulas.

Update Guidelines

What to Update

• AssetLookup: Update for blanks or errors in Portfolio calculated fields
• YieldLookup: Update when yields change or when adding Income Engine assets
• AccountsLookup: Update when you open new accounts

What NOT to Update

• Lists sheet: Do not update unless changing base schema definitions
• Column order: Do not rearrange columns unless you update summary formulas

Key Workflow: Classifying Holdings

Step 1: List Everything You Own

Gather all your holdings across all accounts. Create a simple list with ticker/name, account and current value.

Step 2: Assign Category (FI or Equity)

This is usually straightforward:

• Bond funds, money market funds, CDs, individual bonds → Fixed Income
• Stock funds, ETFs, individual stocks → Equity
• Preferred stocks → Fixed Income (even though they trade like stocks)
• REITs → Equity (even though they're income-focused)

Step 3: Assign Primary Role

For each holding, ask: "Why did I buy this? What job does it do?"

Use the decision trees from the FI Roles and Equity Roles sections.

Step 4: Add to AssetLookup

Enter the classification in your AssetLookup table. This becomes the authoritative source.

Common Portfolio Activities

File Location

The Portfolio File is available for download here -> 📊 Intent Over Identity.
Make a copy in your Google Drive and customize it for your own use.