What is the profit of the book?

In the financial world, the profit of the book is a profit that is proven on paper, but is not yet real. The best way to think about the profit of the book is in terms of stock value; If someone buys shares and the value is rising, earned the book. By selling shares, the investor can turn the book gain into real profit. On the contrary, the loss of the book is the loss stated on paper that has not yet occurred; In an example of shares, the value of the shares after the purchase would decrease, which means that the investor would sell it by selling. Given that the profit has not yet occurred, it could disappear with a sudden market change. Some people prefer to call a book for "paper gain" to remember that the profit has not yet been realized. Likewise, the loss of the book may indicate that the company is financial Ground on Shaky, but business could still stretch.

These unrealized profits can also be misleading for investors, especially investors, whoRome are investigating the stock market. After gaining a book gain, the market could experience a sudden decline and leave the investor right where he started, or with even less money. Learning the art of choosing time to buy and selling shares is important for investors to ensure that it protects their investment and at the same time turns on profits.

One of the common problem that investors have a book gain is that they have difficulty selling shares when their value is declining. For example, if a unit unit is purchased for $ 100 and the value increased to $ 150, the book gain is $ 50. If the investor hangs on stocks and the value falls to $ 130, the sale would still clean the profit, but the investor could relieve sell to Price will climb up again. This may be dangerous in the volatile market, because investors are afraid to let their shares go and as a result they could end in a net loss.

One of the advantages of the book is that it is not taxable because there has been no transaction and profit is only on paper. It can be for some people inourselves. For example, when the value of a piece of property increases, the landowner will be taxed at the same rate as when buying soil, because the increased value is paper profit. Real estate taxes may therefore be kept low unless the soil is sold; As soon as it is sold, the seller is taxed from the profit achieved and the real estate tax is rising to the new buyer.