When you invest, you invest with a view to gain a Return On Your Investment (ROI). A capital gain or loss is the difference between what you buy and sell a stock for.
If you bought 10 shares at €50 per share (€500 worth of shares) and a year later you sell your 10 shares for €75 per share (€750), this means you’ve made a capital gain of €250.
€750 - €500 = €250
Likewise, if you bought 10 shares at €50 per share (€500 worth of shares) and a year later you sell your 10 shares for €45 per share (€450), this means you’ve made a capital loss of €50.
€500 - €450 = €50
In some jurisdictions, when it comes to capital gains tax, if you make a capital loss, you can offset this against your capital gain. For example, if you have a capital gain of €250 and a capital loss of €50, the capital gains tax you may need to pay would be €200
€250 - €50 = €200
Disclaimer: You should check the tax laws in your country with your accountant to see how capital gain tax works in your country.
Please know, the value of investments can go up as well as down and you may receive back less than your original investment, meaning, when investing your capital is at risk.
Disclaimer: At Evarvest we believe in making investing and investment education more accessible, but we don’t provide investment advice and individual investors should make their own decisions. While we try our best, we cannot ensure the accuracy of the information we provide.
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