Net Investment Income

Net Investment Income (NII) refers to the income generated from investments after deducting relevant expenses. It typically includes interest, dividends, and rental income while subtracting investment-related expenses such as management fees and taxes.

For example, if an investor receives $10,000 in dividends and $2,000 in interest from various investments, their gross investment income would be $12,000. If they incurred $1,000 in management fees and $500 in taxes related to those investments, their NII would be:

NII = Gross Investment Income – Expenses

NII = $12,000 – ($1,000 + $500) = $10,500

In another case, a mutual fund might report $5 million in income from investments but have $1 million in expenses. The net investment income would be:

NII = $5,000,000 – $1,000,000 = $4,000,000