Realised vs Unrealised P/L — Money in Your Pocket vs Money on Paper

[MyrinNew]

💰 Realised vs Unrealised P/L — Money in Your Pocket vs Money on Paper

Most investors check their portfolio and see numbers changing every day — but not all those gains (or losses) are real.


Let’s clear that up.



🧠 The Simple Truth

• Realised Profit/Loss → You sold the investment. The gain or loss is locked in.
• Unrealised Profit/Loss → You still hold the investment. The value changed, but it’s only on paper.

Think of it like a house:

The market value of your house may rise — that’s unrealised profit.


You only realise it when you sell.

📊 Real-World Example

You bought AAPL at £150.


Today it’s £170.

Unrealised P/L	Price moved, but you haven’t sold.	+£20 (13.3%)
Realised P/L	You sold at £170 — gain is final.	+£20 (13.3%)

If AAPL drops back to £150 before you sell, the unrealised gain disappears — you never actually made (or lost) money.



🧮 Try It Yourself — P/L Calculator

Paste this code snippet into your local repo (/components/PLCalculator.tsx)






import React, { useState } from "react";

export default function PLCalculator() {
const [buy, setBuy] = useState(150);
const [sell, setSell] = useState(170);
const [shares, setShares] = useState(10);

const pl = (sell - buy) * shares;
const percent = ((sell - buy) / buy) * 100;

return (
div className="max-w-sm p-4 border rounded-xl bg-white dark:bg-gray-900">
h3 className="font-semibold mb-2">P/L Calculatorh3>
label>Buy Price (£)label>
input value={buy} onChange={e=>setBuy(+e.target.value)} type="number" />
label>Sell Price / Current Price (£)label>
input value={sell} onChange={e=>setSell(+e.target.value)} type="number" />
label>Shares Heldlabel>
input value={shares} onChange={e=>setShares(+e.target.value)} type="number" />
p className="mt-3">
strong>{pl >= 0 ? "Gain" : "Loss"}:strong> £{pl.toFixed(2)}
(strong>{percent.toFixed(2)}%strong>)
p>
div>
);
}







`

💡 Tip: Change the “Sell Price” to test different outcomes —

what’s your profit if AAPL falls to £145?

📚 Why This Matters for You

• You only pay taxes on realised gains.
• Unrealised losses may recover — don’t panic-sell.
• Knowing the difference helps you plan exits, re-entry, and rebalancing.

📺 See It in Action

Inside Pocket Portfolio → Trades → P/L View,

you’ll find both realised and unrealised values side by side.





⚠️ Common Mistakes to Avoid

1. Celebrating too early — gains aren’t real until sold.
2. Ignoring taxes — realised profits can trigger capital-gains tax.
3. Confusing volatility with loss — prices move, but that’s not final.

✅ Key Takeaways

• Realised = sold = final profit or loss.
• Unrealised = still invested = paper profit or loss.
• Pocket Portfolio shows both transparently so you always know what’s real.

🔗 Further Reading & References

• FINRA Smart Investing Basics
• CFA Institute — Measuring Performance Accurately

🧩 This article is part 1 of the “Investing Made Simple” series.

Next up: [Reading Your Portfolio Timeline Like a Pro →]

Educational content only — not financial advice.

© Pocket Portfolio 2025 · Evidence-First Investing for Everyone.




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