InvestmentFinancial Glossary
Capital Appreciation
Definition
The increase in the market value of an investment over time. If you buy shares at Rs 100 and they rise to Rs 150, the Rs 50 gain is capital appreciation. It is the primary source of returns in equity investing, as distinct from income returns like dividends or interest.
Why It Matters
Long-term wealth creation in India relies heavily on capital appreciation from equities. Unlike interest or dividends, capital appreciation is only taxed when you sell (realize the gain). This allows unrealized gains to compound tax-free, which is one of the biggest advantages of equity over fixed-income investing.