GLOSSARY TERM
Capital Gain
A capital gain is the profit you make when you sell an investment for more than you originally paid for it.
What does this mean in practice?
If the value of your stock, ETF or other investment rises, that increase is only on paper until you sell. Once you sell at a higher price than your purchase price, the difference becomes a capital gain. In many countries, capital gains may be taxed, which is why selling decisions can have tax consequences.
Example
You buy an ETF for €1,000 and later sell it for €1,300. Your capital gain is €300, before any fees or taxes.
Why it matters
Capital gains are one of the main ways investments create wealth over time. Understanding them also helps you see why long-term investors often avoid unnecessary selling, since selling can trigger taxes and reduce the amount left invested for future growth.
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