Do I pay taxes annually for non-registered investments?
You’ll pay tax once on the income. It depends on how the thing is set up if you pay tax on it as income (could be interest or capital gain or both) as you go along, or as a capital gain when you cash out. Mutual funds tend to be structured so that you get a statement each year telling you what income you got, and what kind it was. In those types of plans you pay tax for each year’s income as you go along. When you cash out, there is no additional tax, but you’ll have to pay tax on that year’s income. If you buy a stock or other equity asset you pay capital gains on the increase in value when you realize the gains (sell the asset). If the same stock pays a dividend, the dividend is income in the year it is paid out. I imagine there may be mutual funds that are similarly structured. You should talk to a CFP about that. They get paid (usually on commission) for knowing that stuff. Good news is that you would never be in a 40% tax bracket for capital gains.
