In this series, we get to the bottom of investing definitions.
Previously, we looked at what “dividend yield” means. Now, let’s tackle the term “capital gain”.
Source: giphySo, what is capital gain?
Capital gain represents the profit someone earns on the sale of an asset, such as a stock investment.
In other words, it’s the difference between the selling price (higher) and buying price (lower) of the asset.
For example, let’s say I bought a stock at $2 and sold it at S$2.50, the capital gain (also known as the profit) I receive is S$0.50.
(Note: If I don’t sell the stock at S$2.50, the S$0.50 only represents a paper gain since the gain has not been realised.)
In Singapore, we are fortunate as we don’t have to pay tax on capital gains from sales of shares:
Source: Inland Revenue Authority of SingaporeIt’s not...
