Do you know the real rate of return on your investments? Generally, Canadians measure the success of their investments based only on the rate of return. While it provides a good snapshot of whether an investment is doing well or not, it is not the only criterion for a true picture of success. A good portfolio is based not only on the return, but also by the tax implications of the investments.

Investors can optimize their real rate of return by utilizing effective asset location strategies to reduce tax exposure. Carefully dividing your investments between registered and non-registered portfolios will help to maximize your overall return. Keep in mind, investments inside your RRSP are tax deferred and a TFSA (Tax Free Savings Account) is not taxable. But everything outside of these investments will have a tax implication.