What is asset location? 5 things to know
1.Asset location is a strategy to maximise post-tax returns.2.Investors have the choice to select and invest from the available taxable instruments, tax-free options and taxdeferred ones.
3.There are differing rates of tax for interest income, dividend income and capital gains, which is what determines where the asset should be located.
4.The best location for a particular asset depends on the investor’s financial position, applicable tax laws, holding period and the form of returns.
5.Asset location is different from asset allocation which is a risk minimising strategy.
Content on this page is courtesy Centre for Investment Education and Learning (CIEL).
Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.
(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)
This story originally appeared on: India Times - Author:Tax Cognition
