Net Investment Income

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Net Investment Income

The income one derives from capital gains, dividends and other activities related to the purchase and sale of securities. It is calculated by subtracting losses on securities transactions from gains. Investment income differs from wages and salary primarily in that one does not need to work for investment income. One can manage one's investments oneself or one can hire a money manager to do it. Both individuals and companies can have net investment income; indeed a publicly-traded company must list its net investment income on its balance sheet. Investment income is often taxed differently than other income. See also: Capital gains tax.