Q&A: What are earnings?

In terms of investments, earnings are the difference between the value of a sold investment and the contributions (or cost basis) of that investment.

Real-life application: Person A bought 100 shares of SPY (a S&P 500 ETF) at $200 per share (total cost of $20,000). The current value of each share is $300, so there are $100 of unrealized gains (or earnings, if sold) per share (or $10,000 for the total holding).

See also:
Q&A: How is a brokerage (taxable investment) account taxed?

Leave A Comment