From Boggleheads https://www.bogleheads.org/forum/vie...php?f=1&t=6211
After settling on your primary asset allocation you can turn to selecting funds that flesh out your desired asset allocation and placing them in the most tax efficient manner. If you do not have taxable accounts, then tax efficiency isnít a huge concern but it is still a factor that should be considered. It is usually best to consider all of your investments together. If you are married you should usually blend accounts held by both spouses into one unified portfolio.
The best place to start building a portfolio is by making a list of all your current investment accounts and the investments in each account.
Next, start with the account types that offer the most limited investment choices, which are usually 401k and 403b type plans. These plans normally offer limited fund choices, so starting here and building around the best fund choices is often the best idea. Look at all the funds available in your 401k and list the ones with the lowest expense ratio from each category (US equity, international equity, bonds, etc).
Finally, you must consider the tax consequences of investing, especially in taxable accounts. Generally, the most tax efficient way to use your different accounts is (our thanks to Taylor Larimore and David Grabiner for this list):
1. Invest as much as possible in your tax-deferred and tax-free accounts.
2. Put the most tax-inefficient funds in your tax-deferred and tax-free accounts.
3. Use only tax-efficient funds in taxable accounts.
4. If all else is equal, put funds with higher expected returns in tax-free (Roth) accounts in preference to tax-deferred (traditional 401(k), 403(b), traditional IRA) accounts.
Here is a list of securities in approximate order of their tax-efficiency. (Least tax efficient at the top.):
Stock trading accounts
Large Value stocks
Large Growth Stocks
Most stock index funds
EE and I-Bonds