The Comprehensive Guide to

Passive Income Investing

SIGN UP FOR PAUL’S NEWSLETTER

Learn the secrets of how Paul Tracy generates over $XXX,XXX per month in passive income!

How to Become Financially Independent Through Passive Income Investing

What is Appreciation?

Appreciation is an increase in the value of an investment.

How Does Appreciation Work?

Let's assume you purchased one share of Company XYZ stock for $5. If that share's value increased to $7, the investment has appreciated by $2.

Note that even though the investment has appreciated by $2, you will not benefit unless you sell the stock and put $7 back in your pocket. If you do not sell, the appreciation is often referred to as “paper profit.”

Why Does Appreciation Matter?

The definition of appreciation on InvestingAnswers Appreciation is the end goal for most investors. It is the founding principle upon which nearly every investment strategy rests. However, to realize the benefits of appreciation, the investment asset must be sold. This is generally considered a taxable event, meaning taxes will be due on some or all of the gains.

Ask an Expert about Appreciation

All of our content is verified for accuracy by Paul Tracy and our team of certified financial experts. We pride ourselves on quality, research, and transparency, and we value your feedback. Below you'll find answers to some of the most common reader questions about Appreciation.

Be the first to ask a question

If you have a question about Appreciation, then please ask Paul.

Ask a question
Paul Tracy
Paul Tracy

Paul has been a respected figure in the financial markets for more than two decades. Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 3 million monthly readers.