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1.
Tax-wise, bonds are a good fit for tax-sheltered accounts rather than taxable accounts because their payouts are taxed at your ordinary income tax rate.
True. For tax purposes, it probably makes sense to keep bonds in tax-sheltered accounts because of their relatively high tax rates.
2.
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.
3.
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.
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.
If you're holding cash in an emergency fund, makes sense to place it into _______.
A taxable account. If you're holding cash for near-term income needs or as an emergency fund, it makes sense to hold it in a taxable account because you may need access to the cash quickly and without penalty.
