unrealised loss
Unrealised Loss is the drop in value on an investment you still hold, a loss that only becomes real once you sell.
In plain English
Here is the strange part. You can lose ₦200,000 and still have every kobo of your money, at least on paper, because nothing has actually left your hands.
That is the trick of an unrealised loss. It lives only in the value of something you are still holding. Sell it, and the loss becomes real, permanent, yours to keep. Hold it, and the loss is just a number on a screen, one that can climb back up tomorrow, next month, or never.
Say your cousin in Lagos bought shares in a Nigerian bank at ₦28 each, spending ₦280,000 on 10,000 units. Six months later, the price has fallen to ₦21. Her holding is now worth ₦210,000. That ₦70,000 gap is an unrealised loss. It hurts to look at, but she has not lost a single naira until she clicks sell.
The same thing happens with a diaspora relative who bought shares in a UK company through an app while working in Manchester, only to watch the price wobble after some bad news. On paper, the account shows red. If she leaves the money there and the company recovers, that red ink simply disappears, as if it never happened.
This is why seasoned investors say the loss is not a loss until you decide it is. Panic selling turns a paper wound into a permanent one. Patience, on the other hand, gives the market room to change its mind.
Tunde buys 5,000 units of a stock at ₦50 each, spending ₦250,000. The price drops to ₦42, so his holding is now worth ₦210,000. His unrealised loss is ₦40,000. If he sells today, he locks in that loss. If he waits and the price climbs back to ₦55, the loss vanishes and turns into a gain.
Questions people ask
Do I pay tax on an unrealised loss?
No. Tax authorities, including Nigeria's, only care about gains or losses you have actually realised by selling. A loss sitting calmly in your portfolio has no tax effect until you cash out.
Should I sell immediately when I see an unrealised loss?
Not automatically. Selling in a panic turns a temporary dip into a locked in loss. It is worth asking whether the reason you bought the investment has actually changed, or whether the market is just having a rough patch.
How is an unrealised loss different from an unrealised gain?
They are two sides of the same coin. Both simply reflect the current market value of something you still own compared to what you paid, one showing you are down, the other showing you are up, neither one final until you sell.
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