Your 2017 tax bill depends as much on asset location as it does on asset allocation.

Asset allocation determines where you're investing your money and how those investments are balanced. Asset location, however, takes it a step further by putting investments that generate huge amounts of ordinary income into tax-deferred or tax-free accounts. It also places investments taxed at a lower capital-gains rate into taxable accounts.

The overall goal is to minimize taxes while protecting asset growth.

"Most asset-location strategies that work today will work just as well in 2018 under almost any scenario, though you may need to make some adjustments," says Thomas Walsh, certified financial planner with Palisades Hudson Financial Group.

So how does it work? First, you have to stop looking at your investments as separate entities and view them all as one big portfolio. Your IRA, Roth IRA, SEP IRA, profit-sharing plan, 401(k) or 403(b) should all be considered options for mixing and matching your investments.

Next, determine which of your investments within those accounts are taxed at the highest rates. If some of your assets are in a real estate investment trust (REIT), for example, they're generating lots of ordinary income and tax liability. Investors can minimize that damage by placing REITs in a tax-deferred retirement plan like a 401(k) or IRA. Taxable bonds have similar issues, but folks who need access to them for more immediate needs can spread them between taxable accounts like Roth IRAs and tax-deferred retirement funds. If your tax bracket is high enough, however, tax-free municipal bonds in taxable accounts may be a better alternative.

"That way, you can get tax efficiency while meeting your allocation to low-risk investments," Walsh says.

Stocks are another story. Investors will see more gains through capital appreciation than via dividends over the long term. If you hold onto those equities for at least a year, you'll get the lower long-term capital gains rate when you sell them. While stocks will yield larger capital gains than bonds in the long run, investors can't get the lower capital gains rate in tax-deferred accounts. With all withdrawals from those kind of retirement accounts subject to ordinary income tax, investors are better off placing stocks and equity funds in taxable accounts like a Roth IRA.

Meanwhile, qualified stock dividends are taxed at a lower federal rate: Between 0% and 23.8% for 2017.

"People in the 15% tax bracket today, for example, pay 15% federal income tax on bond and bank interest but absolutely nothing on qualified stock dividends," Walsh says, noting that even recent tax reform won't kill that tax break in 2018 and beyond.

However, there isn't one broad rule about where to place your stocks. Actively managed stock mutual funds with high turnover pay huge distributions at the end of the year. If investors would rather hold off on paying those taxes until they are in a lower tax bracket, they  should stash those mutual funds in tax-deferred or tax-free accounts.

Index funds and international funds and equities, meanwhile, should be held in taxable accounts. The international stocks and funds withhold foreign taxes on dividends and allow investors to claim a foreign tax credit on their return. Index funds, meanwhile, pay small distributions and have low turnover.

Investors should keep in mind that any annual tax savings from asset location will likely be small and may not make much of an impact on your annual tax bill. However, those moves will help increase your after-tax investment returns year by year.

"Over decades, these small amounts compound and can really add up," Walsh says.

Don't forget to mind your asset allocations as well. Advisors regularly suggest rebalancing your portfolio to ensure that you aren't heavily invested in assets that have done well (equities, for example), and under-invested in assets that have fared poorly. By selling high and buying low, you control future risk and keep your desired returns on track.

Just don't tinker around with your portfolio for the sake of doing so. Finance site NerdWallet found that 12% of U.S. investors would change their asset allocation immediate after the Federal Reserve raises rates. That's the absolute wrong move for a long-term investor.

"Instead of toying with your investments or trying to chase a higher rate or better return," says Arielle O'Shea, NerdWallet investing and retirement specialist, "control the things you can control: How much you're spending — which directly influences how much you have available to save and invest — and whether you're on track to reach your investment goals."

More of What's Trending on TheStreet:

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

More from Roth IRAs

How to Really Diversify Your Retirement Portfolio

How to Really Diversify Your Retirement Portfolio

I'm Still Very Worried About My 401(k) in This Market (Part 2)

I'm Still Very Worried About My 401(k) in This Market (Part 2)

How the Tax Cuts and Jobs Act Affects Retirement Benefits

How the Tax Cuts and Jobs Act Affects Retirement Benefits

Benefits of a Cash Balance Plan for Retirement Savers

Benefits of a Cash Balance Plan for Retirement Savers

What is an Inherited IRA? Distribution Rules and Examples

What is an Inherited IRA? Distribution Rules and Examples