­­­ “Asset location” involves finding the most tax-efficient account type for each holding in a portfolio. The various types of investment returns—interest from bonds, dividends from Canadian and foreign stocks, capital gains—are taxed in different ways, so asset location can have a large impact on after-tax returns.

For investors with unused contribution room in RRSPs and other registered accounts, asset location is rarely a concern. However, if you have maxed out your tax-sheltered accounts, you will need to keep any additional savings in non-registered (taxable) accounts. The most important question, therefore, is which asset classes are best held in your RRSP, and which should be held in taxable accounts?

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