Retirement and Tax Terms
Capital Gain
Profit made when an investment is sold for more than its purchase price.
Also called: investment gain
What it means
A capital gain happens when you sell an investment for more than you paid for it, not counting certain adjustments such as fees or reinvestments. Gains can be taxed differently depending on how long you held the investment and what kind of account it was in.
Why it matters
Understanding capital gains helps users think more clearly about after-tax results, not just headline returns.