Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Upside

What it is:

Upside refers to an investment's potential gains in value.

How it works (Example):

For example, you purchase 100 shares of Company XYZ at $5 per share, for a total investment of $500. If you know or believe that Company XYZ shares will rise to $15 per share at some point, your upside equals ($15-$5 = $10) per share, or $1,000.

The reverse is true for people who short stocks: Their upside comes when the stock price falls.

Why it Matters:

Upside is the fundamental motive for making any investment. The size of the upside, of course, varies with the investment -- and with the risk associated with that investment. Higher-risk investments generally have more upside; low-risk investments generally have less upside and are thus primarily concerned with preserving the value of the original investment.

Ultimately, expected upside is based on estimates and educated guesses. No analyst or investor can predict the future, thus making upside inherently unpredictable.

Related Terms View All
  • Zero Capital Gains Rate
    For example, downtown ABCTown has decayed over the last 10 years. There are many vacant...
  • Yield Elbow
    Also known as the term structure of interest rates, the yield curve is a graph that plots...
  • Garage Liability Insurance
    Let's say John Doe takes his car to Jane Smith's Auto Body to get the tires changed and...
  • Record Low
    For example, let's look at this random chart for Cicso Systems (CSCO). Note the jagged...
  • Tax Sale
    For example, let's say that John owns a home and he owes $4,000 in property taxes. A year...