Realized and unrealized gains sound like technical investing jargon, but the idea is simple. One is a gain you have after selling. The other is a gain that still exists only on paper because you still own the asset.<\/p>\n
That distinction matters more than many investors realize. It affects how you read your portfolio, how you think about performance, and in many cases how you think about taxes and decision-making.<\/p>\n
If you want a simple rule, use this one: unrealized gains describe what your holdings are worth right now, while realized gains describe what a sale has turned into an actual investment result.<\/p>\n
By Deep Digital Ventures Investing Research Team, focused on portfolio tracking and investor education. Reviewed and updated April 24, 2026.<\/em><\/p>\n A realized gain happens when you sell an asset for more than your cost basis<\/a>. An unrealized gain happens when an asset you still own is worth more than your cost basis, but you have not sold it yet. Unrealized gains can change as prices move. Realized gains are generally fixed once the sale is complete.<\/p>\n Many investors look at a portfolio and see a large gain number without thinking about what kind of gain it is.<\/p>\n That can lead to bad decisions. A holding that is up sharply may look like a win, but if you still own it, that value can move tomorrow. At the same time, a sale may create a realized gain even if the remaining portfolio looks flat.<\/p>\n If you do not separate realized from unrealized gains, it becomes harder to judge:<\/p>\n Unrealized gains matter for net worth, allocation, and portfolio review. They just should not be treated as cash or as a final result.<\/p>\n An unrealized gain is a paper gain. It means the market value of an asset you still own is above what you paid for it.<\/p>\n For example, if you bought a stock for $100 and it is now worth $140, you have a $40 unrealized gain as long as you still hold it.<\/p>\n That gain is useful information, but it is not permanent. If the price falls tomorrow, the unrealized gain can shrink or disappear.<\/p>\n This is why unrealized gains should be viewed as current valuation context, not as a finished result.<\/p>\n A realized gain happens when you sell the asset for more than your basis.<\/p>\n Using the same example, if you bought at $100 and sold at $140, the $40 gain becomes realized at the point of sale. That is no longer just a paper gain. It is the result of a sale.<\/p>\n In general terms, the IRS treats gains and losses from the sale or exchange of capital assets as capital gains or losses, which is why the sale itself matters from a taxable account reporting standpoint.[1]<\/sup><\/p>\n Suppose you buy 10 shares of a stock at $50 per share, so your total cost is $500.<\/p>\n The amount may be the same at that moment, but the meaning is different. One still depends on the market price. The other comes from an actual sale.<\/p>\n Partial sales are where many investors get tripped up.<\/p>\n Suppose you buy 20 shares at $50 per share, for a total cost of $1,000. The stock rises to $70, and you sell 8 shares.<\/p>\n If the stock later falls to $60, the unrealized gain on the remaining shares changes, but the realized gain on the shares you sold remains tied to that sale. In real portfolios, the cost basis assigned to sold shares can depend on the method used, such as specific lots, FIFO, or average cost where applicable.[2]<\/sup><\/p>\n Most confusion comes from portfolio dashboards that mix everything together into one green number.<\/p>\n That number can be useful, but it often hides the structure underneath. Investors may assume:<\/p>\n A better tracking setup makes the distinction visible so you can think more clearly about what your portfolio is actually doing.<\/p>\n A practical way to think about the distinction is to give each number its own job.<\/p>\n Unrealized gains tell you what a holding is worth relative to what you paid while you still own it. Realized gains tell you what a sale produced. Both matter, but they should not be collapsed into one vague profit number.<\/p>\nQuick Answer<\/h2>\n
Realized vs Unrealized Gains at a Glance<\/h2>\n
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\n \nQuestion<\/th>\n Realized gain<\/th>\n Unrealized gain<\/th>\n<\/tr>\n<\/thead>\n \n What triggers it?<\/td>\n You sell the asset for more than your basis.<\/td>\n The asset rises above your basis while you still own it.<\/td>\n<\/tr>\n \n Can the number change?<\/td>\n Usually not for that sale, apart from fees, adjustments, or corrections.<\/td>\n Yes. It moves as the market price changes.<\/td>\n<\/tr>\n \n Tax or reporting impact<\/td>\n In a taxable account, a sale may create a reportable capital gain.[1]<\/sup><\/td>\n In a taxable brokerage account, a gain generally is not triggered just because the position rose in value.[1]<\/sup><\/td>\n<\/tr>\n \n Simple example<\/td>\n You bought at $100 and sold at $140, creating a $40 realized gain.<\/td>\n You bought at $100 and still hold it at $140, showing a $40 unrealized gain.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n Why This Difference Matters in Portfolio Review<\/h2>\n
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What Is an Unrealized Gain?<\/h2>\n
What Is a Realized Gain?<\/h2>\n
A Simple Example<\/h2>\n
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A Partial Sale Example<\/h2>\n
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Why Investors Get Confused<\/h2>\n
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Using Both Numbers the Right Way<\/h2>\n
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