unrealised gain
Unrealised Gain: the profit your investment has made on paper, which becomes real money only once you actually sell.
In plain English
You check the value of the land you bought in Ibeju Lekki two years ago, and the agent tells you it has doubled. You feel rich for about five minutes, then remember you have not sold a single plot. That warm feeling of being richer without a kobo in your account is exactly what an unrealised gain feels like.
In the stock market, it works the same way. Say you bought shares in a Nigerian bank at ₦20 each, and today they trade at ₦28. On paper, you are smiling. But that smile is not cash. It is a number on a screen that moves up and down depending on the day, the mood of the market, and things completely outside your control.
An unrealised gain becomes a realised gain only when you sell and the money actually lands in your account. Until then, it is a story, not a receipt. Someone in London holding shares in a UK company that has jumped in value can feel the same excitement, but the tax authority and the bank statement will only care once those shares are sold.
This distinction matters for anyone sending money home too. A relative abroad who holds dollars while the naira weakens might feel their money has grown in value, but that gain only means something once they convert and remit it. Before that, it is potential, and potential can vanish as quickly as it appeared.
The lesson is not to distrust growth, but to hold it loosely until it is locked in. Paper profit is lovely to look at, but it cannot pay school fees or rent on its own.
Ngozi buys 500 shares of a company at ₦50 each, spending ₦25,000. The price rises to ₦70, making her shares worth ₦35,000. Her ₦10,000 gain is unrealised. If she sells today, it becomes real money. If she waits and the price drops to ₦45 next month, that ₦10,000 gain disappears without her ever touching it.
Questions people ask
Do I pay tax on an unrealised gain?
Generally no. Most tax systems, including Nigeria's, only tax gains once you sell and the profit becomes real, though rules can differ for certain assets, so it helps to check with a tax adviser for your specific situation.
Is an unrealised gain the same as profit?
It behaves like profit on paper, but it is not guaranteed profit until you sell. Many investors have watched a healthy unrealised gain shrink or disappear before they cashed out.
Should I sell just to lock in an unrealised gain?
Not automatically. It depends on your goals, how long you planned to hold the investment, and whether you believe the price will keep rising. Selling too early can mean missing further growth, while waiting too long can mean watching gains fade.
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