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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 October 17, 2020

What is Upside?

Upside refers to an investment's potential future increase in value.

How Does Upside Work?

For example, you purchase 100 shares of Company XYZ at $5 per share, for a total investment of $500. If you know or believe that Company XYZ shares will rise to $15 per share at some point, your upside equals ($15-$5 = $10) per share, or $1,000.

The reverse is true for people who short stocks: Their upside comes when the stock price falls.

Why Does Upside Matter?

Upside is the fundamental motive for making any investment. The size of the upside, of course, varies with the investment -- and with the risk associated with that investment. Higher-risk investments generally have more upside; low-risk investments generally have less upside and are thus primarily concerned with preserving the value of the original investment.

Ultimately, expected upside is based on estimates and educated guesses. No analyst or investor can predict the future, thus making upside inherently unpredictable.

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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 Upside, then please ask Paul.

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