Capital Gain
A capital gain is the profit when you sell an asset for more than you paid.
Why this matters
It is a key part of total return and can have tax consequences.
Simple example
You buy a stock at $50 and sell at $65. Your capital gain is $15 per share.
Common mistakes
- Ignoring taxes when calculating actual profit.
- Focusing only on gains and forgetting dividends or fees.
- Assuming unrealized gains are locked in.