Investment Income

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DEFINITION of 'Investment Income'

Income coming from interest payments, dividends, capital gains collected upon the sale of a security or other assets, and any other profit that is made through an investment vehicle of any kind.

BREAKING DOWN 'Investment Income'

Generally, most people earn a large portion of their total net income through employment income. However, disciplined saving and investment in the financial markets can grow moderate savings into large investment portfolios, yielding an investor a large annual investment income.

In income statements of publicly traded companies, you will commonly see an item called investment income (or losses); this is where the company reports the portion of the net income that was obtained through investments made with surplus cash as opposed to being earned with the company's usual line of business.

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RELATED FAQS
  1. What are the differences between a bond's yield to maturity and the spot rate?

    One should expect income when buying stocks in the consumer packaged goods sector. This sector is considered a defensive ... Read Full Answer >>
  2. What is the difference between underwriting and investment income for an insurance ...

    Underwriting and investing are two different methods an insurance company uses to generate income. The underwriting income ... Read Full Answer >>
  3. What is the difference between capital gains and investment income?

    The difference between capital gains and other types of investment income is the source of the profit. Capital refers to ... Read Full Answer >>
  4. Are dividends considered passive or ordinary income?

    Despite the fact that earning dividends requires no active participation on the part of the shareholder, they do not meet ... Read Full Answer >>
  5. How do dividends affect the balance sheet?

    Dividends paid in cash affect a company's balance sheet by decreasing the company's cash account on the asset side and decreasing ... Read Full Answer >>
  6. Who actually declares a dividend?

    It is a company's board of directors who actually declares a dividend. The declaration date is the first of four important ... Read Full Answer >>

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