Choose wisely. There is only one correct answer to each question.
0%
Keep studying!
Review your answers below to learn more.
1.
What is asset location?
How investors distribute their investments between tax-sheltered and taxable accounts. Asset location refers to how investors divvy their investments between tax-sheltered and taxable accounts.
2.
In general, which investments below are not good choices for tax-sheltered accounts?
Non-dividend paying stocks. Long-term capital gains, which is what you have when you sell a stock that you've held for at least a year, are taxed at a much lower rate than is bond income or dividends.
3.
Why would exchange-traded funds be good choices to be held in taxable accounts?
They limit capital gains payouts. This is a feature that is built in to them.
4.
Which investments do an effective job of restraining capital gains distributions?
All of the above. All of these investments are structured in such a way as to keep the lid on capital gains distributions.
5.
Income from cash investments is taxed at _______.
Ordinary income tax rates. For this reason, it might make sense to keep your cash in tax-sheltered accounts; however, cash's value as a way to meet near-term needs means most people will keep it in taxable accounts for easier access and lack of withdrawal penalties.
