What is the meaning of “capital gains” in finance?

Capital gains refer to the profit earned from the sale of an asset, such as stocks, bonds, real estate, or other investments, when the selling price exceeds the original purchase price. The gain is typically realized when the asset is sold, and it is subject to taxation. Capital gains are classified as either short-term or long-term, depending on how long the asset was held before being sold. Short-term capital gains are typically taxed at a higher rate than long-term gains, which are taxed at a more favorable rate. Investors seek capital gains as a way to grow their wealth by profiting from the appreciation of their investments over time.