# How to Calculate Unrealized Profit

Calculate your unrealized profit so that you can see how your investments are doing.
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Just because one or more of your assets has increased on paper doesn't mean you'll put that increased amount in your pocket. Until you cash out a stock or sell your gold or house, you haven't realized any profit. That's because, by the time you get around to selling, the profit might change (or disappear).

In addition, if you don't take your stock profits and instead reinvest them, you can avoid paying capital gains tax. Understanding how to calculate unrealized gain/loss will help you make the right financial decisions for your personal situation.

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Read More​: How to Measure Stock Performance

## What is Unrealized Profit?

Unrealized profit is the amount of gain you've made on an asset but haven't taken yet. For example, if you buy a stock for ​\$1,000​ and sell it when it gets to ​\$2,000​, you've made, or realized, a profit of ​\$1,000​. If you decide to keep the stock because you believe it will continue to go up in value, you have increased the value of your holdings, but you haven't realized a profit – you only have an unrealized profit.

In the example above, the ​\$1,000​ gain is a gross profit, not a net profit. Your net profit will depend on how much you might have to pay in taxes, fees and commissions. Remember that unrealized profits are only potential profits. By the time you sell your stock, gold, bond or house, the value might go up or down.

Read More​: How to Calculate Net Gain or Loss

## Net vs. Gross Amounts

When you buy or sell a stock or other security, you might have to pay a transaction fee. When you sell the security you might have to pay another transaction fee or pay your broker a commission. In addition, you might have to pay capital gains tax. In our example above, you will want to estimate any fees, commissions and taxes before you sell your stock to determine your net profit, or what you'll put in your pocket. Don't forget to subtract any fees you had to pay to make your initial purchase of the stock.

As another example, if you bought a house for ​\$300,000​ and it's now worth ​\$375,000​, don't forget all of the costs involved with selling a house, such as an inspection fee, getting it ready for sale, realtor commissions, closing costs and taxes.

## Calculate Your Current Unrealized Profit

To calculate the unrealized profit of an asset, simply subtract the beginning value of the asset for the time period you're estimating from the current value. If you have stock that you bought three years ago, you can calculate your overall unrealized profit by subtracting the price of the stock three years ago (when you bought it) from its current price. If you want to determine your unrealized profit for this month, quarter or year, use one of those starting points. If you want to know what your actual net profit will be, run the initial calculation above and then subtract all of your fees, commissions, taxes and other expenses.