Here's the tax efficiency comparison between different account types that I use to decide where to put which investments.

Tax-free accounts (Roth IRA, Roth 401k): best for assets with highest expected long-term growth. VTI, VXUS, and any high-growth component of your portfolio. The tax-free compounding is most valuable on assets that grow the most.

Tax-deferred accounts (traditional 401k, traditional IRA): best for income-producing assets and bonds. BND dividends would be taxed annually in a taxable account; in a traditional 401k they compound without that annual tax drag.

Taxable brokerage: best for assets you'll hold long-term (to benefit from long-term capital gains rates), and for tax-efficient funds like total market index funds that generate minimal distributions.

The practical allocation: hold bonds and REITs in traditional accounts, hold your highest-expected-return equity (especially small-cap and international) in Roth accounts, and hold broad domestic index funds in taxable.

This is 'asset location' and it adds 0.2-0.5% annually in after-tax returns for most investors — not enormous but meaningful over decades.