How to Calculate Unrealized Gain and Loss of Investment Assets

by Cynthia Hartman

Calculating unrealized gains and losses on an investment asset shows the amount and type of changes in its value over time. Although the value changes, as long as the investor does not sell the asset, the gains and losses are only on paper, explaining why they are called "unrealized." If the investor sells the asset, his gains or losses would then become realized. These paper profits or losses can be calculated with basic mathematics.

Step 1

Locate the market value, or current price, of the asset you are analyzing. The asset could be an individual company stock, a mutual fund, bond or unit of gold, for example. Current price information is available on Internet sites such as Yahoo! Finance. Write the current price per unit down on a sheet of paper and label it as "today's value."

Step 2

Write down the historical unit value of the asset. This could be its value yesterday, last week, last month, or last year. Choose the asset's value from a point in time that will provide enough useful information for your purposes.

Step 3

Subtract the asset's historical value from its current value. If your answer is positive, the asset has gained value, meaning it is worth more today than it was in your previous period. If the answer is negative, the asset has lost value relative to the previous period.

Step 4

Multiply the gain or loss per unit by the total number of units of the investment. For example, a stock's price per share has gained $1 in value from August 1 to August 31. An investor owns 30 shares of the stock, so the total unrealized gain is $1 multiplied by 30 shares, or $30.

Step 5

Interpret your results. Asset values may fluctuate often, leading to possibly substantial changes in unrealized gains and losses, sometimes in a short period of time. If an asset has an unrealized loss, compare the results to its previous performance and the market's overall performance to gather insight into possible explanations the specific asset's fluctuating performance.

Photo Credits

  • Hemera Technologies/ Images