Capital Gains
The profit you make when you sell an investment for more than you paid.
A capital gain is sale price minus cost basis. In the US, gains on things held over a year are usually taxed at lower long-term rates; under a year, they are short-term and taxed like regular income. Losses can offset gains at tax time. None of this is tax advice; check your own situation.
For example
Buy at $20, sell at $25, and you have a $5-per-share capital gain. Hold longer than a year first and it may be taxed at a lower rate.
Related terms
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