What Are Realised and Unrealised Returns?

Unrealised Return (or Unrealised P&L)
An unrealised return (or Unrealised P&L), often called a paper profit or loss, reflects the change in value of an investment you still hold. It shows the notional gain or loss based on current market price versus your purchase price but since the asset hasn’t been sold, the return is not yet “locked in. In simple words, it means your investment has gone up or down in value but you haven't sold it yet. So the gain or loss isn’t final.

For example, if you purchase shares of ₹100 of Company X at ₹200 per share. Then that becomes ₹20,000 in total.

Now suppose, current market price rises to ₹250.
Then Unrealised Gain will be equal to (₹250 – ₹200) × 100 = ₹5,000. This ₹5,000 is a gain on paper. It reflects the potential profit but no cash is in hand until you sell.

Realised Return (or Realised P&L)
A realised return (or Realised P&L) is the actual profit or loss you earn when you sell an investment. It represents the final outcome of the trade: the selling price minus your original cost. Once realised, this return becomes tangible and in many cases, taxable. In simple terms, this is the actual profit or loss you get after selling your investment. Once you sell, the return becomes real that means you can use that money, and you may have to pay tax on it.

For example, you decide to sell all 100 shares of Company X at ₹250 per share.

Then the sale proceeds will be equal to ₹25,000 and the cost basis will become ₹20,000. Now the Realised gain will be equal to ₹25,000 – ₹20,000 = ₹5,000 which is a complete transaction. The gain is now actual, usable, and may be taxed depending on regulations.