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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.
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.
3.
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.
4.
Which statement below is true?
You should review your asset location framework every few years. You should review your framework every few years, as tax treatments of investments can change over time.
5.
Mutual funds with a lot of turnover are best for _______.
Tax-sheltered accounts. Mutual funds with a lot of turnover generally generate a load of capital gains that investors cannot control, and are therefore best suited to tax-sheltered accounts.
