What are capital gains?

Capital gains are like extra money you get when something you own goes up in value.

Imagine you have a toy that costs $10. You buy it, play with it every day, and one day, you decide to sell it. If someone offers you $15 for it, the extra $5 is your capital gain, it’s the profit from selling something you owned that became more valuable.

Let’s say you have a piggy bank. You save up and buy a bike for $20. A few years later, you decide to sell it because you got a new one. If someone buys your old bike for $30, you made $10 more than what you paid, that extra $10 is also a capital gain!

People like capital gains because they get to keep the money from things growing in value, just like how your piggy bank gets bigger when you add coins. Whether it’s toys, bikes, or even houses and stocks, capital gains are the happy surprise of getting more back than what you put in.