You may be thinking of a qualified retirement account. The rules for those are different.
In a regular investment account, investment income is taxed in the year it is accrued, whether you take it out of the account or not. This applies to interest, dividends, and the sale of securities.
If you are buying and selling stocks, you have a "realized" gain or loss in the year of sale. You can then invest that money in something else. The IRS taxes that money even though you just let it sit in the account.
The only situation in which this is not true is for qualified retirement accounts. In that situation, the income is only taxed when you take the money out. If it is a Roth account, you put after tax money into the account, and it is never taxed again, so your investment profits accrue tax-free.
This article has more information about the
tax treatment of investments.
