related to retirement savings, estate planning, and philanthropy. Examples include 401 (k) plans, grantor trusts, charitable remainder trusts (CRTs), and charitable foundations. These are only a few of the many entities available. We will not attempt to provide even a basic overview of estate planning in this book. It is too complex a subject. We will use these four entities to demonstrate the value of asset location strategies. This concept was briefly discussed in Chapter 29. Asset location refers to the positioning of the various components of an asset allocation plan among the various entities that make up an investor's estate. We have defined the goal of investing as: Subject to funding my consumption needs, maximize the risk-adjusted real value of wealth that will be received, net of income and estate taxes, by my intended heirs and charitable beneficiaries. The growth of wealth and its transfer to heirs or charities is affected by ongoing income and capital gains tax as well as any transfer taxes. The entities described above have various tax characteristics. Their usefulness varies by asset class. Financial assets can be broadly grouped into four categories by the nature of their return. Return Asset Class/Strategy 1. Tax-exempt income Municipal bonds, tax-exempt money market securities. 2. Taxable income, dividends Government and corporate bonds, and short-term gains taxable money market securities, bank accounts, real estate investment trusts (REITs), hedge funds, preferred stock. 3. Realized long-term gains Actively managed public equities, private equity funds. 4. Unrealized appreciation Equity index funds, tax-efficient equity strategies. This is a simplification because many assets produce both income and gains, but the categorization is helpful in understanding asset location. The key is to