When you realize a profit from selling
a stock for more than you paid to buy it, you have a
capital gain.
Of course, the gain doesn't all go into
your pocket. You owe taxes as well as a commission on the
sale. But if you've owned the stock for longer than
a year, your profit is considered a
long-term capital gain.
That means you pay tax at a lower
rate than you pay on income you earn on interest income
or on the gain you realize on assets you hold for less than
a year.
