What types of investment income does this tool model?

This tool models three common sources of investment income: dividends, interest, and realized capital gains. You can set separate yield assumptions for each and see how they contribute to your total income.

How are taxes estimated?

You enter your own estimated tax rates for dividends, interest, and capital gains. The tool applies these rates to the gross income amounts to estimate total tax and net income. Actual tax outcomes depend on your full situation and local rules.

What is the account mix section for?

The account mix lets you approximate how much of your portfolio is held in taxable, tax-deferred, and tax-free accounts. This helps you see how much of your income may be taxed now versus later or not at all.

Is this a tax calculator?

No. This is an educational planning tool. It uses simple percentage-based tax assumptions to illustrate how investment income might be taxed, but it is not a full tax calculator and does not replace professional advice.

Can I export the income breakdown?

Yes. Use the Export CSV button to download a table showing gross income, taxes, and net income by type. You can import it into a spreadsheet or share it with an advisor.

How often should I update my assumptions?

It’s a good idea to revisit your yield and tax assumptions at least once a year, or whenever markets, interest rates, or your personal tax situation change. This keeps your planning aligned with reality.

Investment Income Distribution Tool

Estimate how your portfolio generates income from dividends, interest, and capital gains, apply simple tax assumptions, and see your net investment income distribution.

Total portfolio value Dividend yield (%) Interest yield (%)

Capital gains yield (%) Dividend tax rate (%) Interest tax rate (%)

Capital gains tax rate (%) Taxable accounts (%) Tax-deferred accounts (%) Tax-free accounts (%)

Tip: Start with conservative yield and tax assumptions, then adjust to reflect your actual portfolio and tax situation.

Important: This tool uses simple percentage-based yields and tax rates to estimate investment income. Actual results depend on your full portfolio, tax rules, and timing of gains. Use this for planning and education, and confirm details with a qualified tax or financial professional.

Investment income and tax formulas

This tool uses straightforward formulas to estimate how your portfolio generates income and how much of that income you keep after taxes. By separating dividends, interest, and capital gains, you can see which sources drive most of your cash flow and tax burden.

1. Annual income by type

Dividend income = Portfolio value × (Dividend yield ÷ 100)
Interest income  = Portfolio value × (Interest yield ÷ 100)
Capital gains    = Portfolio value × (Capital gains yield ÷ 100)

Each yield is expressed as a percentage of your portfolio value. For example, a 2.5% dividend yield on a $250,000 portfolio produces $6,250 in annual dividend income.

2. Tax calculation by type

Dividend tax = Dividend income × (Dividend tax rate ÷ 100)
Interest tax = Interest income × (Interest tax rate ÷ 100)
Capital gains tax = Capital gains × (Capital gains tax rate ÷ 100)

These formulas apply your assumed tax rates to each income stream. In reality, tax rules can be more complex (qualified vs. ordinary dividends, short- vs. long-term gains), but this gives a clear first-pass estimate.

3. Net income and distribution

Total gross income = Dividend income + Interest income + Capital gains
Total tax          = Dividend tax + Interest tax + Capital gains tax
Net income         = Total gross income − Total tax

The tool then shows how much of your net income comes from each type, helping you understand whether your portfolio is more income-oriented (dividends and interest) or growth-oriented (capital gains).

The account mix inputs (taxable, tax-deferred, tax-free) are used to approximate how much of your portfolio is exposed to current taxation. While the tool does not model full tax deferral mechanics, it highlights how shifting assets between account types can change your effective tax drag.

Understanding your investment income distribution

Investment income is one of the most powerful levers in long-term wealth building. Whether you rely on your portfolio for current cash flow or you are reinvesting everything for growth, knowing how your income is generated and taxed helps you make more deliberate decisions.

The three main sources of investment income

Most diversified portfolios generate income from three primary sources:

Dividends: Cash distributions from stocks, funds, or real estate investment trusts (REITs). Dividend yields are often quoted as a percentage of the current price.
Interest: Payments from bonds, savings accounts, CDs, and other fixed-income instruments. Interest yields are influenced by prevailing interest rates and credit risk.
Capital gains: The increase in value of your investments when you sell them for more than you paid. Realized gains create taxable income; unrealized gains do not until you sell.

Each source behaves differently across market cycles and is taxed differently depending on your jurisdiction and account type.

Why distribution and taxes matter

Two portfolios with the same total return can feel very different in practice. A high-dividend portfolio may provide steady cash flow but generate more current taxes, while a growth-oriented portfolio may rely more on capital gains that you can control by choosing when to sell. Interest income, especially from taxable bonds, can be taxed at higher ordinary income rates.

By modeling your income distribution, you can see whether your current strategy aligns with your goals. If you need predictable cash flow, you might accept a bit more tax drag in exchange for dividends and interest. If you are focused on long-term growth, you may prefer lower current income and more tax-efficient capital appreciation.

How the tool models your situation

When you enter your portfolio value and yield assumptions, the tool calculates annual income for each type. It then applies your estimated tax rates to show how much you might owe in taxes and how much you keep as net income. The account mix inputs help you think about where your assets are held: taxable accounts, tax-deferred accounts (like traditional retirement plans), and tax-free accounts (like Roth-style accounts).

For example, if 40% of your portfolio is in taxable accounts and 60% is in tax-advantaged accounts, you might mentally assign more of the current tax burden to the taxable portion. While the tool does not simulate full tax law, it encourages you to consider how asset location affects your after-tax outcomes.

Worked example

Imagine a $250,000 portfolio with a 2.5% dividend yield, 1.8% interest yield, and 4.0% capital gains yield. That produces:

Dividend income: $6,250
Interest income: $4,500
Capital gains: $10,000

If you assume a 15% tax rate on dividends, 22% on interest, and 15% on capital gains, the tool will estimate your total tax and net income. You might discover that interest income, even though smaller, carries a heavier tax burden, while capital gains provide a large share of your net income.

From there, you can experiment: What happens if you shift more bonds into tax-deferred accounts? What if you favor funds that distribute less taxable income and rely more on long-term gains?

Practical tips for using the results

Use conservative yield assumptions based on current market conditions rather than optimistic long-term averages.
Align your tax rate inputs with your marginal rates and any special rules for qualified dividends or long-term gains.
Review your account mix to ensure income-heavy assets are not concentrated in highly taxed accounts.
Export the CSV and share it with a financial or tax professional to discuss optimization opportunities.

Ultimately, the goal is not to predict your income down to the dollar, but to build intuition about how your portfolio behaves and how taxes shape your real-world outcomes.

Frequently Asked Questions

How precise are the income estimates?

The estimates are based on simple percentage yields applied to your portfolio value. Actual income will vary with market prices, distribution policies, and timing. Treat the results as a planning guide, not a guarantee.

Can I model monthly income instead of annual?

This version focuses on annual income for simplicity. To approximate monthly income, divide the annual net income by 12, or export the CSV and build a custom monthly view in a spreadsheet.

How should I choose tax rates?

Use your best estimate of the marginal tax rates that apply to each income type. For dividends and capital gains, consider whether they are qualified or long-term. When in doubt, err on the side of slightly higher rates to avoid underestimating taxes.

Does the account mix change the tax math?

The account mix is an educational overlay rather than a full tax engine. It helps you think about where income is generated, but it does not implement detailed rules for tax deferral or Roth withdrawals.

Is this tool suitable for retirement income planning?

It can be a useful starting point for retirement planning, especially to understand how much income your portfolio might generate. However, full retirement planning should also consider withdrawals, required minimum distributions, Social Security, and other factors.

Is this financial or tax advice?

No. This tool is for education and illustration only. It does not account for all rules or your full situation. For personalized guidance, consult a qualified financial planner or tax professional.