1. What is Net Investment Income?

Net Investment Income (NII) represents the profit generated from investment activities after deducting all related expenses. It is a key metric for evaluating the performance of investment portfolios and determining taxable income from investments.

2. How Does the Calculator Work?

The calculator uses the Net Investment Income formula:

Where:

• \( \text{Investment Income} \) — Total income from all investment sources (USD)
• \( \text{Investment Expenses} \) — Total expenses related to investment activities (USD)

Explanation: This straightforward calculation helps investors understand their actual profit from investment activities by accounting for all costs associated with maintaining and managing investments.

3. Importance of NII Calculation

Details: Calculating Net Investment Income is crucial for tax purposes, investment performance analysis, financial planning, and making informed decisions about portfolio management and future investment strategies.

4. Using the Calculator

Tips: Enter investment income and expenses in USD. Both values must be non-negative numbers. The calculator will automatically compute the net investment income and display the result in USD.

5. Frequently Asked Questions (FAQ)

Q1: What constitutes investment income?
A: Investment income includes dividends, interest, capital gains, rental income, royalties, and any other earnings from investment assets.

Q2: What are considered investment expenses?
A: Investment expenses include management fees, advisory fees, transaction costs, custodial fees, and other direct costs associated with maintaining investments.

Q3: How is NII different from gross investment income?
A: Gross investment income represents total earnings before expenses, while NII reflects the actual profit after deducting all investment-related costs.

Q4: Is NII taxable?
A: Yes, Net Investment Income is generally subject to taxation, though specific tax treatment depends on your jurisdiction and the type of investments.

Q5: How often should I calculate my NII?
A: It's recommended to calculate NII regularly - monthly for active investors, quarterly for most investors, and annually for tax reporting purposes.