But here's another chestnut that often gets left out: It's not what you make, it's what you keep. Taxes matter -- a lot -- and folks who plan their portfolios without adjusting for them will end up with less cash than they think.

That's the conclusion of a study published in a recent issue of the Financial Analysts Journal by William Reichenstein, a financial analyst and investment management professor at Baylor University in Waco, Texas.

"Financial managers who use the traditional approach to calculate individuals' asset allocations are miscalculating their true allocations," he writes. "The ... errors can be substantial."

Reichenstein argues for calculating investments on an after-tax basis when weighing how much of a portfolio they take up. And tax treatments of investments should be considered when divvying up those assets into taxable, tax-deferred, and tax-free portfolios.

To make sure that you're keeping more of what you're making, first understand that different investments have different tax treatments.

Profits on stocks held for less than a year are considered regular income, as are money market interest, real estate gains and bond dividends. Their tax rates can top 30 percent.
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