01 / 10
What Are Capital Gains and Capital Losses?
📈 ↔ 📉
Investment value can go up or down.
When you buy an investment such as shares, its value may change
over time.
If you later sell the investment for more than you paid for it,
you have made a capital gain.
If you sell it for less than you paid, you have made a
capital loss.
Simple idea:
Buy lower → Sell higher = Capital Gain
Buy higher → Sell lower = Capital Loss
02 / 10
What Is a Capital Gain?
Capital Gain 📈
Sell Price > Purchase Price
You sell the investment for more than you originally paid.
For example, imagine you buy shares for K2,000.
Later, you sell those shares for K2,500.
The gain comes from the increase in the value of the investment.
03 / 10
What Is a Capital Loss?
Capital Loss 📉
Sell Price < Purchase Price
You sell the investment for less than you originally paid.
Imagine you buy shares for K2,000.
Later, you sell them for K1,600.
A capital loss means the investment was sold for less than
its original purchase amount.
04 / 10
A Simple Zambian Example
Example: Buying Shares
Chanda buys shares for a total of K5,000.
After some time, the shares increase in value.
Chanda sells them for K6,500.
The difference is:
K6,500 − K5,000 = K1,500
Chanda has made a capital gain of K1,500 before considering
transaction costs, taxes or other applicable adjustments.
The important point is that the gain becomes realised when
the investment is sold for more than its relevant purchase cost.
05 / 10
A Capital Loss Example
Example: The Value Falls
Suppose Banda buys shares for K5,000.
Later, the shares fall in value and Banda sells them
for K4,000.
The difference is:
K4,000 − K5,000 = −K1,000
Banda has made a capital loss of K1,000 before considering
transaction costs, taxes or other applicable adjustments.
This shows why investors need to understand that share prices
can move both upwards and downwards.
06 / 10
When Does a Gain Become Realised?
Buy
K3,000
→
Value
K4,000
→
Sell
K4,000
Suppose you buy shares for K3,000 and their market value later
rises to K4,000.
You may see an increase of K1,000 in the value of your investment.
But if you have not sold the shares, that increase has not
been realised through a sale.
When you sell the shares, the actual gain or loss can then
be calculated based on the relevant purchase and sale amounts.
Important: Tax treatment of gains and losses
can depend on Zambian law and your circumstances. Always check
current official requirements before making tax decisions.
07 / 10
Gain Does Not Mean All the Money Is Profit
Beginners sometimes calculate a gain by simply subtracting
the purchase price from the selling price.
This is useful for understanding the basic concept, but in real
investing there can be other costs to consider.
- Brokerage or transaction charges
- Other investment-related fees
- Applicable taxes
- Other costs connected with the transaction
Simple Example
Purchase amount: K5,000
Sale amount: K6,000
Basic price difference: K1,000
Your final net result may be different after relevant
costs and taxes are considered.
08 / 10
Capital Gain vs Capital Loss
Capital Gain 📈
+K1,000
Selling price is higher than the relevant purchase cost.
Capital Loss 📉
−K1,000
Selling price is lower than the relevant purchase cost.
The basic concept is straightforward: compare what you received
from selling the investment with what you paid for it,
while remembering that actual calculations can require
consideration of transaction costs, taxes and applicable rules.
Understanding gains and losses helps you understand what is
happening to your investment when its value changes.
09 / 10
What Should a Beginner Remember?
🧠 📊 💰
Know your purchase price. Know your sale price. Know your costs.
- A capital gain happens when an investment is sold for more than its relevant purchase cost.
- A capital loss happens when an investment is sold for less than its relevant purchase cost.
- A rise in market value before selling is not the same as a realised gain from a completed sale.
- Transaction costs can affect your actual return.
- Taxes and their treatment depend on applicable Zambian rules and circumstances.
- Investments can go up as well as down.
- Never assume that every investment will produce a gain.
Key idea: Investing involves both opportunity
and risk. A good investor understands both gains and losses.
10 / 10
🎓
Lesson Complete!
Well done! You now understand the difference between
capital gains and capital losses.
Remember:
A gain is not guaranteed. Share prices can rise or fall,
and your final return can be affected by costs and
applicable taxes.
The most important lesson is simple:
understand what you paid, what you received when you sold,
and the costs involved.
When you invest in shares, the value of your investment can change. Sometimes the value goes up, and sometimes it goes down. Understanding these changes is an important part of becoming a knowledgeable investor.
A capital gain happens when you sell an investment for more than its relevant purchase cost. For example, if you buy shares for K5,000 and later sell them for K6,500, the basic difference is a K1,500 capital gain, before considering transaction costs, taxes or other applicable adjustments.
A capital loss happens when you sell an investment for less than its relevant purchase cost. If you buy shares for K5,000 and later sell them for K4,000, the basic difference is a K1,000 capital loss.
There is another important idea to understand. Imagine you buy shares for K5,000 and their market value rises to K6,500. You can see that the investment is currently worth more, but if you have not sold it, you have not completed a sale that realises that gain.
Capital gains and losses are not just numbers on a screen. They help investors understand how the value of their investments has changed.
In this lesson, you will learn how capital gains and capital losses work, how to calculate them using simple Kwacha examples, why investment costs matter, and why a rising share price does not automatically mean money has been put into your pocket.
The most important lesson is simple: investments can make money, but they can also lose money. Understanding both sides is essential before investing.
