Thanks for reading and commenting. You are correct that they way Investor B earns their return matters exactly because of the tax implications, especially if they hold a lot of investments less than 1 year. If they get the returns through buy and hold real estate, taxes would be more favorable.

401ks are good and can work well if done right because of the simplicity. I maxed mine out for years, but now that I know more about investing, I no longer max it out (just max out the employer contributions) and use the rest for other investing activities.