Capital gain

Capital gain is a term used in finance to refer to the profit made by an investor through the sale of an asset or financial asset at a higher price than the initial purchase price. In other words, capital gain represents the positive difference between the sale price and the purchase price of an investment.

Taxation of capital gains may vary from country to country and according to local tax laws. In some cases, there may be tax breaks for long-term investments in order to incentivise long-term investment and financial stability.

It is important to note that the capital gain is not a true gain until the investor decides to sell the asset and actually realise the profit. Until then, the gain represents only an increase in value on paper. The investor must consider taxes and other costs associated with the sale before deciding to dispose of an investment to obtain the capital gain.

Correlated words

Financial Instrument

A Financial Instrument is a tool or asset used in financial markets for investment, trading, or funding activities, like stocks or bonds.

Purchasing power

Purchasing power refers to the quantity and quality of goods and services that can be acquired with a given amount of money.

Bonds

Bonds are debt securities issued by governments or institutions to raise funds for various financial purposes.

Deficit

A Deficit in economics signifies a situation where expenses exceed revenues, resulting in a state of financial loss.

Default

Default occurs when an entity fails to meet its debt obligations, potentially leading to bankruptcy or other financial repercussions.

CPI

The Consumer Price Index (CPI) is the principal measure used to track inflation, reflecting the average price change over time.

Capital

Capital refers to funds or assets for investment or economic activities crucial for business growth and development.

Commercial Bank

Commercial Banks cater to individuals and small businesses, offering deposit accounts, loans, and other traditional banking services.

Central Bank

The Central Bank sits atop the banking hierarchy, working with the government to regulate monetary policy and currency issuance.

Stocks

Stocks are financial instruments representing ownership shares in a company, entitling holders to a portion of the corporate profits.