What is the difference between capital gain and investment income?

A capital gain, therefore, is the profit realized when an investment is sold for a higher price than the original purchase price. Investment income is profit that comes from interest payments, dividends, capital gains collected as a result of the sale of a security or other assets, and other profits made through an investment vehicle of any kind.

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 the difference between a capital gain and a profit?

Here's a look at the differences and what they mean in terms of investments and taxes paid. Capital is the initial sum invested. So, a capital gain is a profit that occurs when an investment is sold for a higher price than the original purchase price. Investors do not make capital gains until they sell investments and take profits.