Investment Losses

Investment losses refer to the decrease in the value of an investment relative to its purchase price. This can occur in various forms, such as when stocks, bonds, real estate, or other assets decline in market value. Investment losses can be realized or unrealized; realized losses occur when the asset is actually sold for less than its original purchase price, whereas unrealized losses refer to declines in value that have not yet been locked in through a sale. Investment losses can impact an individual’s or entity’s financial health, affect tax obligations, and influence future investment strategies. They serve as an essential aspect of investment risk, where the potential for loss is counterbalanced by the prospect of gain.