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Is investment income a result of capital gains?

Some investment income is attributable to capital gains. However, the income that is not a result of capital gains refers to earned interest or dividends. Unlike capital gains, the amount of return for these investments is not reliant on the initial capital expenditure.

How do investors make money?

When it comes to making money in the markets, investors have two main ways: capital gains and investment income. A capital gain is when an investment rises to a higher price than an investor paid. In contrast, investment income consists of payments such as dividends and interest as well as realized capital gains.

What is a capital gain?

A capital gain is the increase in value of a capital asset when it is sold. Whenever you sell an asset for more than what you originally paid for it, the difference between those two prices is the capital gain.

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