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Glossary entry · Money in motion
Capital gain
Definition
The increase in value of an investment, realized only when you sell. Unrealized gains exist on paper while you still hold the asset; realized gains happen the moment you sell — and usually trigger taxes. Capital gains are the main way most stock investors make money over time.
Example
Buying a stock at $100 and selling at $150 produces a $50 capital gain per share.
Related
Money in motion
Compound interest
Interest paid not just on what you put in, but on the interest you have already earned.
Read →Inflation
The rate at which the general price of things rises. Same money, less purchasing power.
Read →Interest rate
The percentage something pays — or costs — per year.
Read →Return
The gain (or loss) on an investment, usually expressed as a percentage per year.
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