Several articles on your site refer to taxable and non-taxable portfolios. I don’t see examples of how to allocate taxable accounts. I have approximately equal amounts in taxable and tax-deferred accounts, and I’m looking for help in allocating the taxable one. I am in my middle 50s and plan to work for at least another 10 years. How should I allocate the taxable portfolio?

Of course we believe that taxable accounts should have the appropriate allocation to fixed-income funds. We do not make specific bond-fund recommendations due to the many variables involved in choosing the best mix for any individual investor. For example, municipal bonds are appropriate for some investors and not for others, depending on their tax brackets; and if you’re going to invest in muni bonds, the best funds depend on your state of residence.

Those considerations aside, for fixed-income funds in a taxable account, stick with short-term and intermediate-term government bond funds.

Some advisors recommend that you concentrate your tax-efficient asset classes (equities) in taxable accounts and your more-heavily-taxed assets, such as fixed-income funds, in your tax-deferred accounts. This way, you don’t have to pay taxes every year on interest income from the bond funds.

From a strictly tax standpoint, this makes good sense. But it can cause problems later when it’s time to rebalance or withdraw money for living expenses in retirement.

To understand why, consider that most retirees deplete their taxable accounts first, letting their IRA, 401(k) and similar accounts continue to grow with taxes deferred.

To describe an extreme situation, imagine that you retired with a taxable account exclusively in equities and a tax-deferred account exclusively in bond funds. As you took more and more money from your taxable account (equities), your overall allocation would move more and more heavily to fixed income, gradually taking away the equity funds that you need to keep up with inflation.

After a few years of this you might have a serious asset-allocation problem.

You could solve that problem in the tax-deferred account by selling equity funds and buying fixed-income funds. However, that is an act of rebalancing that might or might not be comfortable.

You could also solve that by starting to withdraw some of your income from the tax-deferred account in order to keep a balance of equities and fixed-income investments. But doing that would reduce the long-term benefit of the tax deferral.

Which approach is best for you? I don’t think you should put yourself in a position where you’ll have to choose.

My advice is to make sure you have proper asset-class diversification, whether that’s 60 percent equities, 50 percent equities or some other percentage. Then use the same balance in each account. This will help you maintain the right level of risk and avoid exposing yourself to large market losses that you cannot afford.