Unrealized gain (or loss)
The paper gain or loss on an investment you still hold — the difference between today's market value and your cost basis, before any sale.
An unrealized gain or loss is the difference between what an investment is worth today and what you paid for it, while you still own it. Nothing has been sold. The number changes as prices move, and it changes again the moment you look at it tomorrow.
A worked example. 100 shares bought at $40 for a cost basis of $4,000, now trading at $55, hold a market value of $5,500 and an unrealized gain of $1,500. If the same shares fall to $32, they hold an unrealized loss of $800. In both cases the position is still open — no tax is owed, and no loss is deductible.
Unrealized gains and losses become realized only when the position is sold, at which point they land on a tax return. Inside retirement accounts, day-to-day paper moves have no tax consequence in either direction. In a taxable brokerage account, an unrealized gain is a future tax bill in waiting.
Plumb is financial education, not financial, investment, tax, or legal advice.