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Posted on Oct 23 • Originally published at pocketportfolio.app

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

#investing #fintech #pocketportfolio #education

💰 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.

Status	Meaning	Value Change
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 Calculator</h3>
      <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 Held</label>
      <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 unrealised values.

⚠️ Common Mistakes to Avoid

Celebrating too early — gains aren’t real until sold.
Ignoring taxes — realised profits can trigger capital-gains tax.
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

🧩 This article is part 1 of the “Investing Made Simple” series.
Next up: [Reading Your Portfolio Timeline Like a Pro →]

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