Capital growth
Also called: capital appreciation
An investment becoming worth more than you paid, so selling it later returns more.
One of the two sources of investment return, the other being income such as dividends, interest or rent.
Capital growth is unrealised until you sell — a number on a screen. That is a feature rather than a technicality: a fall that you do not sell into has not cost you anything, and a gain you have not sold is not yet money.
In many countries selling triggers tax on the gain, which is worth knowing before you plan around a figure.
Long-run returns generally come from both sources together, with income reinvested rather than spent.
Words on this page
- Dividend — A share of a company's profits paid out to the people who own it.
- Interest — The price of using someone else's money — paid by borrowers, earned by lenders.
Related terms
Covered properly in Learn.