Book Value vs. Market Value

These are two different ways of looking at the same investment. Book value (sometimes called book cost) is the total amount you originally paid, including any commissions. Market value is what that investment is worth today based on its current price.

How it works

If you bought 100 shares of a stock at $20 each, your book value is $2,000. If the stock price rises to $25, your market value is $2,500. The difference between the two ($500) is your unrealized gain. If the stock drops to $18, your market value is $1,800, and you have an unrealized loss of $200.

Your brokerage will usually show both numbers in your account. Book value stays the same unless you buy more shares, reinvest dividends, or receive a return of capital. Market value changes constantly based on the current price.

Why it matters

Knowing the difference helps you understand how your investments are actually performing. If your market value is higher than your book value, you’re up. If it’s lower, you’re down. Our guide on why investment returns are confusing explores common pitfalls when interpreting these numbers.

It also matters at tax time. In a non-registered account, your capital gain or loss when you sell is calculated based on your book value (specifically your adjusted cost base) compared to your selling price. Keeping track of book value is important for accurate tax reporting, especially if you’ve bought the same stock multiple times at different prices.