As I do every year, I've just analyzed the three-year and five-year tax-adjusted returns for all Vanguard funds. I also go one step further and, besides using the current income and capital gains tax rates in my calculations, I incorporate reduced tax rates on qualified dividend income as specified under the 2003 Tax Act.

This year, given the losses sustained in the 2000 to 2002 bear market, many of which are still sitting on the books, it should come as no surprise that tax-efficiency remains fairly high across the board at Vanguard.

I told you about Growth Equity, but take a look at all the large-cap growth funds as a group. Among the worst, from a tax-efficiency standpoint: PRIMECAP (VPMCX).

Yet, the fund also had the highest after-tax return over the past five years at 102.8%. And my favorite Vanguard growth fund scores high on all counts, with five-year tax-efficiency of 96% and a tax-adjusted return of 133%.

Are the Tax-Managed funds really giving you the best bang for your buck?

Well, they're tax-efficient. But my 2007-2008 special momentum pick, despite its lower 87% tax-efficiency, outpaced Tax-Managed International's (VTMGX) index approach (97% tax-efficiency) over three years with tax-adjusted returns of 46.8%.

And it doesn't stop there. Tax-Managed Capital Appreciation's (VMCAX) 19.3% three-year after-tax return was better than Total Stock Market's (VTSMX) 18.8% return over three years, but not over five.

Is it worth paying a higher minimum and being locked into a fund with a back-end load just for the tax-managed moniker and a fractional return advantage?

Get Rich by Paying Taxes

I think you get the point. In the final analysis, the most tax efficient funds aren't necessarily the ones that leave you with the most money once you've paid your taxes.

That's why I've posted the three-year and five-year tax efficiency for all of Vanguard's funds to my website and analyzed which Vanguard funds have given investors the best after-tax returns.

As you'll see, some funds might have made you pay more taxes, but they also left a lot more money in your pocket.

But not all of them will give you the best returns for 2008. I'll tell you which Vanguard funds will give you the most bang for your 2008 tax dollar when you join me for a risk-free trial to my newsletter, The Independent Adviser for Vanguard Investors. Even better, I've just updated my Buy/Hold/Sell ratings on numerous funds due to a subtle shift I see taking place in the markets and the economy. Among others, I think it's the perfect time to begin juicing your yields with one of Vanguard's bond funds. Get your issue right here now!