2007-01-30 07:59:42 · 4 answers · asked by ShouldIStayorGo 2 in Business & Finance ➔ Investing
An "unrealized" investment is one that is still "open."
(Great, I've used more Wall Street jibberish)...
When you purchase a stock or property (land/home) you "open" a position with that investment. In instances where you sell something that you do not have (short selling stock) you have "opened" a negative position. During the time that this position is "open" the value will fluctuate. Hopefully, the value will rise, (unless you sold it short, in which case you want the value to decline) at this time you have an "unrealized" profit/loss. When you then "close" your position, i.e. by selling the stock or selling the land, (or in the case of selling short you buy the stock) you have realized...or converted to currency...turned into money...your position.
During the technology boom/bust of the 1990's, many (hundreds of thousands) made tons and tons of "Unrealized" profit in stocks. These people were termed "Paper-Millionaires," due to the fact that they were millionaires, but on paper only, as they hadn't sold their stock and "realized" the gain. As such, many of the stocks crashed and thousands of people lost their status as millionaires as their stocks became worth less, little, or nothing.
2007-01-30 08:15:55 · answer #1 · answered by gnibblet 2 · 0⤊ 0⤋
It is called an "unrealized gain" or an "unrealized loss". Not an unrealized investment.
Say you bought a can of beans on sale, for $1. and a week later, the price is up to $2 per can. You have doubled your money! But you don't have to pay taxes on it, because you have not sold it yet. That is an unrealized gain. If you sell it for $2, you have not realized the gain, and that is a taxable event. Now you have to pay taxes on the $1 that you made.
2007-01-30 09:40:31 · answer #2 · answered by Feeling Mutual 7 · 0⤊ 0⤋
From Feeling Mutual's answer delete the word "not" from "If you sell it for $2, you have ..... " Unrealized investments (gains or losses) are ones you still own. When you sell, you realize the gain or loss.
2007-01-30 14:46:43 · answer #3 · answered by gosh137 6 · 0⤊ 0⤋
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2016-01-17 16:33:20 · answer #4 · answered by ? 3 · 0⤊ 0⤋