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Discussion in 'Investing Glossary' started by Glossary, 26th Sep, 2006.

  1. Glossary

    Glossary Active Member

    12th Sep, 2006

    Taking a profit or loss by selling an asset, is known as "realising" that profit or loss. Prior to the sale of an asset, changes in the asset value is known as "unrealised" profits or losses.

    For example, if an asset you purchased for $100,000 has risen in value to $120,000 and you still own it, this is said to be an unrealised gain (or unrealised profit) of $20,000. If you sell the asset to take those profits, then you are "realising" the profits.

    Similarly with losses - you haven't actually lost something until you sell an asset for less than you paid for it. At that point you have realised your losses. Until you sell, the loss is considerd "unrealised" or a "paper loss".

    You may also hear people refer to "crystalising losses" by selling an asset for less than you paid for it. This means the same as "realising losses".

    Also known as:
    • Crystalised profit (realised profit)
    • Crystalised loss (realised loss)

    See also:
    Last edited by a moderator: 26th Sep, 2006