It’s not just what you earn but what you keep, said Elle Kaplan, founding partner of LexION Capital, an asset management firm.

If tax free is the name of the game, using a blend of buckets can reduce taxes today and in the future. Buckets include taxable, tax-deductible and tax-deferred, non-deductible and tax-deferred and tax-free.

Tax allocation is vital in an investment portfolio , said Larry Rosenthal, a certified financial planner and president of Rosenthal Wealth Management Group in Virginia. Most investors have saved their money in accounts that have never been taxed, making it much harder to efficiently distribute money in retirement. People sometimes forget the tax consequences they can face.

Factors and strategies that impact the amount levied include tax hikes in any given year, asset allocation, selection, security location, timing and alternative tax saving methods.

Optimizing after-tax returns requires accounting for the impact of taxes on a portfolio’s asset allocation and security selection, said Duncan Rolph, partner and managing director with Miracle Mile Advisors.

Also See: Study — Retirement Assets Fall Short for Most

A client might place high yield bonds and other very tax inefficient funds in his retirement account and tax efficient municipal bonds and equities in his taxable accounts, Rolph told MainStreet. They can also try to manage their income in retirement to lower their effective tax rate on distributions. In extreme circumstances, they might consider relocating to states with lower tax rates.

One simple way investors can minimize taxes is by investing in funds that have historically been tax-efficient.

Look for low turnover and low historical capital gains distributions, said Kevin Ashworth, chartered financial analyst and director of investments with EP Wealth Advisors in Torrance, Calif. Try to avoid taking short-term capital gains as much as possible.

Monthly contributions can also help to minimize taxes.

Typically, investors periodically rebalance their portfolios by selling assets that have appreciated and buying assets that have depreciated in value or at least have risen less.

Monthly contributions allow you to rebalance without actually selling investments, Ashworth told MainStreet. You just buy the positions that are required to get you back to your asset allocation.

For those investing without a broker or advisor, a stable asset allocation to minimize taxes is to invest in the broadest and lowest cost equity index investments.

This will minimize capital gain distributions and allow more control of taxable events, said Scott Burns, chief investment officer with AssetBuilder in Plano, Texas. That allocation also means high volatility.

Sturdy broad market index vehicles include the Vanguard Total Stock Market fund or ETF and the Schwab Multi-Cap Core ETF.

—Written by Juliette Fairley for MainStreet