{"id":658513,"date":"2025-01-22T15:32:43","date_gmt":"2025-01-22T20:32:43","guid":{"rendered":"https:\/\/erickimphotography.com\/blog\/?p=658513"},"modified":"2025-01-22T15:33:30","modified_gmt":"2025-01-22T20:33:30","slug":"whats-realized-vs-unrealized-return","status":"publish","type":"post","link":"https:\/\/erickimphotography.com\/blog\/2025\/01\/22\/whats-realized-vs-unrealized-return\/","title":{"rendered":"What\u00e2\u20ac\u2122s realized vs unrealized return\u00c2\u00a0"},"content":{"rendered":"\n

The terms realized return<\/strong> and unrealized return<\/strong> refer to the profit or loss on an investment, but they differ based on whether the investment has been sold.<\/p>\n\n\n\n

Realized Return<\/strong><\/p>\n\n\n\n

\u00e2\u20ac\u00a2 Definition<\/strong>: The profit or loss you have already secured by selling the investment.<\/p>\n\n\n\n

\u00e2\u20ac\u00a2 Example<\/strong>: You bought a stock at $50 and sold it at $60. The $10 gain per share is your realized return because the transaction is complete.<\/p>\n\n\n\n

\u00e2\u20ac\u00a2 Tax Implications<\/strong>: Realized returns are typically taxable.<\/p>\n\n\n\n

Unrealized Return<\/strong><\/p>\n\n\n\n

\u00e2\u20ac\u00a2 Definition<\/strong>: The paper profit or loss on investments you currently hold but haven\u00e2\u20ac\u2122t sold yet.<\/p>\n\n\n\n

\u00e2\u20ac\u00a2 Example<\/strong>: You bought a stock at $50, and its market value is now $60. The $10 gain per share is your unrealized return because you haven\u00e2\u20ac\u2122t sold the stock yet.<\/p>\n\n\n\n

\u00e2\u20ac\u00a2 Tax Implications<\/strong>: Unrealized returns are not taxable since the investment has not been sold.<\/p>\n\n\n\n

Key Difference:<\/strong><\/p>\n\n\n\n

\u00e2\u20ac\u00a2 Realized return<\/strong> involves completed transactions and may have tax consequences.<\/p>\n\n\n\n

\u00e2\u20ac\u00a2 Unrealized return<\/strong> is still hypothetical and reflects potential profit or loss.<\/p>\n\n\n\n

.<\/p>\n\n\n\n

Realized return<\/strong> and unrealized return<\/strong> are two ways of describing whether an investment\u00e2\u20ac\u2122s gains or losses have been \u00e2\u20ac\u0153locked in.\u00e2\u20ac\u009d<\/p>\n\n\n\n

1. Unrealized Return (Unrealized Gain or Loss)<\/strong><\/p>\n\n\n\n

\u00e2\u20ac\u00a2 Also referred to as a \u00e2\u20ac\u0153paper\u00e2\u20ac\u009d gain or loss.<\/p>\n\n\n\n

\u00e2\u20ac\u00a2 Occurs when the value of the investment changes (goes up or down) but you still hold the asset.<\/p>\n\n\n\n

\u00e2\u20ac\u00a2 Because the asset hasn\u00e2\u20ac\u2122t been sold, the gain or loss is not finalized\u00e2\u20ac\u201dyou could lose it if the price drops (or the loss could reverse if the price goes back up).<\/p>\n\n\n\n

\u00e2\u20ac\u00a2 For example, if you bought a stock at $390 and it\u00e2\u20ac\u2122s now priced at $400, you have an unrealized gain of $10 per share (about 2.56%). But this gain is not locked in until you sell.<\/p>\n\n\n\n

2. Realized Return (Realized Gain or Loss)<\/strong><\/p>\n\n\n\n

\u00e2\u20ac\u00a2 Occurs when you sell the asset and \u00e2\u20ac\u0153realize\u00e2\u20ac\u009d (finalize) the gain or loss.<\/p>\n\n\n\n

\u00e2\u20ac\u00a2 Once you sell at a higher (or lower) price than your purchase price, the gain (or loss) becomes realized and is typically used for tax calculations.<\/p>\n\n\n\n

\u00e2\u20ac\u00a2 In the same example: if you purchased a stock at $390, and then you sell it at $400, you realize a $10 gain per share (a 2.56% realized return).<\/p>\n\n\n\n

In short:<\/p>\n\n\n\n

\u00e2\u20ac\u00a2 Unrealized return<\/strong> is the gain or loss you have on paper, before selling.<\/p>\n\n\n\n

\u00e2\u20ac\u00a2 Realized return<\/strong> is the gain or loss you lock in once you sell the asset and the transaction is complete.<\/p>\n","protected":false},"excerpt":{"rendered":"

The terms realized return and unrealized return refer to the profit or loss on an investment, but they differ based on whether the investment has been sold. Realized Return \u00e2\u20ac\u00a2 Definition: The profit or loss you have already secured by selling the investment. \u00e2\u20ac\u00a2 Example: You bought a stock at $50 and sold it at […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"advanced_seo_description":"","jetpack_seo_html_title":"","jetpack_seo_noindex":false,"jetpack_seo_schema_type":"","_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_post_was_ever_published":false},"categories":[17],"tags":[],"class_list":["post-658513","post","type-post","status-publish","format-standard","hentry","category-posts"],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/erickimphotography.com\/blog\/wp-json\/wp\/v2\/posts\/658513","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/erickimphotography.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/erickimphotography.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/erickimphotography.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/erickimphotography.com\/blog\/wp-json\/wp\/v2\/comments?post=658513"}],"version-history":[{"count":2,"href":"https:\/\/erickimphotography.com\/blog\/wp-json\/wp\/v2\/posts\/658513\/revisions"}],"predecessor-version":[{"id":658515,"href":"https:\/\/erickimphotography.com\/blog\/wp-json\/wp\/v2\/posts\/658513\/revisions\/658515"}],"wp:attachment":[{"href":"https:\/\/erickimphotography.com\/blog\/wp-json\/wp\/v2\/media?parent=658513"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/erickimphotography.com\/blog\/wp-json\/wp\/v2\/categories?post=658513"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/erickimphotography.com\/blog\/wp-json\/wp\/v2\/tags?post=658513"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}