Capital appreciation is when the price of an asset rises. For example, if you purchase shares for R200 and if you held those shares for one year and they are now worth R300. The capital appreciation would be R100.
Another way to explain capital appreciation is the difference between the purchase price and selling price of an investment.
Which Assets gain Capital Appreciation?
Assets that usually gain capital appreciation are real-estate, shares, mutual funds, ETFs, gold and other commodities.
It important to note that in general, capital appreciation is not taxed until the gains are made real through the sale of the asset.
Causes of Capital Appreciation
The value of an asset increasing in value can contribute to many factors some of them include, economic growth, lower interest rates and supply and demand.
Conclusion
There are my calculators available that can be used to give you an indication of how much capital appreciation will occur. People also use and develop long-term and short-term strategies when working towards capital appreciation.
