Definition of paper profit
: a profit that can be realized only by selling something (such as a security) that has appreciated in market value
First Known Use of paper profit
Financial Definition of PAPER PROFIT
What It Is
Paper profit refers to the amount you would gain on a security if it were sold.
How It Works
For instance, if a bond were purchased at $600 and the current market price is $1,200, the paper profit would be $600 ($1,200 - $600 = $600).
Why It Matters
The paper profit on a held security can be calculated at any point. This can be helpful to investors as they consider selling certain assets as part of their portfolio strategy.
When making a decision on your potential profit or loss, it's important to consider any fees or taxes you may incur as a result of selling.
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