What is Investment Income? Definition, types, and tax treatments - Business Insider

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Investment income is money earned by your financial assets or accounts, and understanding how it works can help maximize your profits

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The key to identifying which investment option is better than others lies in identifying which investments offer greater income potential. And that depends to some degree on how they're taxed — how much of the money you actually get to keep. Savings, checking, and other financial accounts all earn interest. Among investments, interest comes from debt securities —When you buy a bond, you're essentially loaning money to the issuer.

Often people reinvest their dividends back into the company, buying more stock. But those dividends are still taxable. Since the highest ordinary income tax bracket is currently 37%, having capital gains taxed at 15% or 20% can result in some serious tax savings.Annuities are often considered a source of investment income, though technically they are insurance products.

 

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