In 174 out of the 200 most populous metropolitan areas in the United States, earnings and wages consist of 65% or more of reported income. While this percentage is substantial, it begs the question: Where does other reported income come from?
This other income stems from investments, such as taxable interest, dividends and capital gain distributions, along with unemployment compensation, taxable Social Security benefits, pensions, annuities, cancellation of debt and distributions from a trust.
These returns are known as unearned income and vary greatly by place. In some locations, much more than 65% of income is the result of salaries and wages, whereas in others, income from investments almost matches the amount from salaries and wages.
In a study by Smart Asset, the firm examined where residents are earning the most from their investments. The study specifically focused on four investment types (taxable interest, ordinary dividends, capital gains and qualified dividends) across three metrics (the percentage of returns with the investment type as a percentage of all tax returns with income, average income for tax returns with each type of income, and the total amount of income earned in each type of investment as a percentage of all income earned).
Some of the key findings from the study were that Florida and California take a majority of the top spots. Also, although taxable interest is the most common form of investment income in most places, capital gains far outpace the three other forms of investment income in terms of amounts.
The top 10 places where residents earn the most from their investments are as follows:
- Naples-Immokalee-Marco Island, Florida
- Bridgeport-Stamford-Norwalk, Connecticut
- North Port-Sarasota-Bradenton, Florida
- San Francisco-Oakland-Hayward, California
- Boulder, Colorado
- Charlottesville, Virginia
- Seattle-Tacoma-Bellevue, Washington
- Cape Coral-Fort Myers, Florida
- Boston-Cambridge-Newton, Massachusetts-New Hampshire
- San Jose-Sunnyvale-Santa Clara, California
Check out the full study at the SmartAdvisor Match website.