All you need to know about asset location

Investors have the choice to select and invest from the available taxable instruments, tax-free options, and tax-deferred ones.

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There are differing rates of tax for interest income, dividend income, and capital gains, which is what determines where the asset should be located.

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The best location for a particular asset depends on the investor’s financial position, applicable tax laws, holding period, and the form of returns.

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Asset location is different from asset allocation which is a risk-minimising strategy.

(Disclaimer: The opinions expressed in this column are those of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)

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