That's the Big Smitty method! A good solution. My only reservation about that one is that the tag is pretty hard, as textiles go, especially on the edges and corners, and over time I wonder if it could mar the chrome from flapping around in the wind. But the red tag makes it much easier to spot visually, and makes it easy to find in your pocket.
I tried a leather key case for a while that I bought on Ebay for about $5. Just a leather folding case that holds 3-5 keys and encases the ones you're not using. But that flopped around so much at speed, I replaced it with the Kodakey. It was discussed in a thread on the Parts and Accessories page a while back.
It's a very soft leather, and the clasp stays in the up position when riding so there's no risk to scratching the tank. The clasp is magnetized so as soon as the two parts are in proximity, it clicks shut. The leather has been treated with something, so for a while it is likely to smear lightly on the tank until it all wears off, but I just wipe it off. It's like a thin film of mineral oil or something.
A few guys have said they use only the bike key with no ring. That works, but it makes the key harder to locate (being a black item, small, and nothing really identifiable about it to anyone else or tactilely by the owner). And then you don't have your house key handy. Whatever vehicle I'm driving, I like my house key on the ring so I know I always have it. And if somehow your key falls out of your pocket, it's good to have a little "sump'n sump'n" attached to it to make it jingle and show up better in the weeds. I'm not a fan of the "key only" option. But, whatever works for the individual.
But everyone has a solution that works for him/herself.