Yahoo Finance: “I Asked an Advisor Which Bonds Belong in a Taxable Account — Here’s the Logic”
Yahoo Finance, Feb. 26, 2026 — In today’s article by Chris Adam, he writes, “Now that we’re in another tax time, lots of Americans begin to question their money choices and how they impact the taxes they owe. Among those questions is which bonds belong in taxable accounts.”
For insight, he turned to advisors, including Marguerita Cheng, CFP® Pro, CEO of BlueBlue Ocean Global Wealth for ideas that may help protect your money in future tax years.
Marguerita said: Focus on Location and Efficiency
“Asset location can be just as important as asset allocation. It’s best to avoid including corporate bonds and high-yield bonds in taxable accounts. It’s more advantageous to invest in these bonds in tax-deferred accounts because the interest on corporate bonds is taxed as ordinary income at the federal, state, and local levels. While the high income associated with high-yield bonds is attractive, having them in a taxable account means taxable income at federal, state, and local levels as well.”
When it comes to taxes, it’s important to focus on efficiency, she added. “Consider investing in tax-efficient bonds, such as municipal bonds, for tax-free federal and often state income. U.S. Treasury bonds may also be appropriate because they are exempt from state and local taxes.”