Asset Location by Account (Tax-Saving)

In investing, "asset allocation" is deciding the split of stocks, bonds, and cash. But there's another concept, similar yet different. It's "asset location."

Asset location is the question of "which account you hold the same asset in." Besides ordinary brokerage accounts, we have tax-benefit accounts like pension savings, IRP, and ISA. These accounts defer tax (tax deferral) or cut it (low-rate/tax-exempt).

The key principle is this: "The more heavily an asset is taxed, the more it goes in a tax-benefit account, and assets that are lightly taxed to begin with go in ordinary accounts." Then, overall, the tax you pay shrinks, so even for the same return, the money remaining after tax can be larger.

To understand why splitting assets by account pays off, you first need to know how taxes differ by account (as of July 2026).

① Domestic listed stocks in an ordinary account — for small shareholders, trading gains are tax-exempt (dividends are subject to 15.4% withholding). In other words, they're lightly taxed to begin with.

② Domestically listed overseas ETFs and bond-type products — both trading gains and distributions carry the 15.4% dividend income tax. This is fairly heavily taxed.

③ Direct overseas stocks — 22% on the portion of transfer gains exceeding 2.5 million won a year.

④ Pension savings/IRP — trading gains and distributions generated within the account aren't taxed immediately and are deferred until withdrawal (tax deferral). If received as a pension after age 55, a low pension income tax of 3.3–5.5% attaches. However, the IRP can hold only up to 70% in risky assets (30% or more in safe assets).

⑤ ISA — tax-exempt up to 2 million won of net gain (4 million won for the low-income type), with the excess taxed separately at a low 9.9%.

Once you know the tax differences above, the direction of placement naturally emerges.

Assets suited to tax-saving accounts (pension savings/IRP/ISA) — those originally taxed heavily. Bond types with frequent dividends/interest, REITs (real estate), high-dividend ETFs, domestically listed overseas-index ETFs, and the like. Holding such assets in a tax-deferred account lets the untaxed amount be reinvested as is, growing the compounding effect.

Assets suited to ordinary accounts — those originally taxed lightly. Representatively, domestic listed stocks have tax-exempt trading gains for small shareholders, so even without using a limited tax-saving account, the tax burden is small.

Why divide it this way? Tax-saving accounts have a "limit" on how much you can put in. To extract the maximum tax-saving effect, you should fill that limited tax-saving space with the most heavily taxed assets. Putting domestic stocks—which have no tax to begin with—into a tax-saving account wastes that precious space.

Here's something I really want to emphasize. There's no formula that's "unconditionally the right answer" for asset location.

The optimal placement varies greatly by your income level, age, when you plan to withdraw and use the money, and how much of your tax-saving account limits you're using. For example, for someone who needs a large sum well before age 55, piling assets into a pension account that's hard to withdraw from can actually be disadvantageous. Trying to get the tax benefit, you could owe an early-termination penalty.

Also, tax law changes every year. Today's favorable placement can be different next year. So this article isn't a prescription of "do it this way," but tells you the principle that "since taxes differ by account, placing assets with that in mind can change after-tax returns."

Our site showing fees and taxes without hiding them is in the same vein. If you look only at pre-tax returns, you miss a lot. For a concrete design, we recommend consulting a tax professional who knows your situation.