What is unrealized profit?

unrealized profit is a profit from stocks that have not yet been sold. This is also referred to as paper gains or paper money. Although there is a profit and an investor who owns shares at any time, the profit is not implemented or a claim until the investor sells shares and does not take his profits. Shares can be purchased and sold on the stock exchange through stock brokers and online broker discounts. Shares are going up and down based on how much every investor is willing to pay for them. The offer concerning what people pay for and a request that concerns what people ask can change on the basis of the other jamming when the stock exchange is open.

The investor who buys shares can buy as many shares as he can afford. When each share rises, it earns money for a specific share in shares. If it has multiple shares, it will make a profit from each shares it owns. For example, if an investor owns 100 shares of shares that rises by $ 0.10 (USD), it produces $ 100 x $ 0.10 or $ 10.

Any money that the investor earns when stocks are rising is considered an unrealized profit until the investor sells shares. The profit is referred to as unrealized profit, because the shares could return the price and the investor could lose the money he earned. So until the investor sells shares and really gets the profit he earned, he really did not earn money even on the shares itself.

When the investor sells shares, profit is no longer an unrealized profit. At this point, the investor is taxed by profits that he receives for the shares. If he owned the shares for a long time - more than one year - must pay taxes on capital profits in the United States Tax Act. If the shares owned less than one year, the profits are taxed as a normal income.

Many investors are referred to as paper wealth or even as paper millionaires, because of the unrealized profit on athe ccs they own. If the stock does not sell and the market falls dramatically, these millions of dollars will basically disappear. This happened when the stock market crashed in 2000, in the event widely considered to be a "rupture" of a technical bubble.