A capital gain is the profit from selling an investment above its cost. If you buy shares for 1,000 birr and later sell them for 1,300 birr, the 300 birr difference is your capital gain before fees and tax. A capital loss is the opposite: selling below what you paid.

Key takeaways

  • Gains are usually realised only when you sell, not when the price merely rises.
  • Transaction costs reduce the net gain you actually keep.
  • Tax treatment of capital gains varies by country and asset type.
  • Focusing only on paper gains can tempt you to ignore dividends and total return.

Why it matters in Ethiopia

Many first-time ESX investors think mainly in terms of price rises. Tracking capital gains alongside any dividends gives a fuller picture of how an investment actually performed.