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Paul Tracy

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Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 2 million monthly readers. While there, Paul authored and edited thousands of financial research briefs, was published on Nasdaq. com, Yahoo Finance, and dozens of other prominent media outlets, and appeared as a guest expert at prominent radio shows and i...

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Updated August 5, 2020

What is Paper Profit?

Paper profit refers to the amount you would gain on a security if it were sold.

How Does Paper Profit Work?

Also called book profit, paper profit is the not-yet-realized amount gained on a security based on the spread between its current market price and its original purchase price.

For instance, if a bond were purchased at $600 and the current market price is $1,200, the paper profit would be $600 ($1,200 - $600 = $600).

Why Does Paper Profit Matter?

The paper profit on a held security can be calculated at any point. This can be helpful to investors as they consider selling certain assets as part of their portfolio strategy.

It's very important to note that a paper profit only turns into a realized profit when you actually sell the security.

When making a decision on your potential profit or loss, it's important to consider any fees or taxes you may incur as a result of selling.

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Paul has been a respected figure in the financial markets for more than two decades. Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 2 million monthly readers.

If you have a question about Paper Profit, then please ask Paul.

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