What is the meaning of realization in finance?
Realization is, literally, when something is made real. For example, let's say that you own some stock.  You bought the stock for $1000, and after many years the stock is worth $10,000.  Your investment has gained $9,000.  However, you don't actually have this $10,000; you just own stock that is supposedly worth $10,000 on paper.  Tomorrow, the value of the stock could plummet and only be worth $8,000.  But if you sell your stock today and obtain this $10,000, the gain has now become real.  You have realized a $9,000 gain. In investing, realization of a gain or loss occurs when an asset that you own has been sold for more or less than what you purchased it for.  Before the asset is sold, you only have a theoretical gain or loss based on what you might receive if you sold the asset today.  And tomorrow, that theoretical gain or loss could change. Realization is when you actually have something in hand, it isn't just theoretical anymore.  For instance, you may win the lottery, but until they hand you a check, you haven't realized the windfall.  Another example is that you may be paid a particular hourly wage, but until you cash the paycheck, you haven't realized the pay.
"If you ask ten different couples what they do, depending on a variety of factors, you'll get anywhere between two and ten different answers. One personal finance blogger that I read swears by the fact that he and his wife keep their finances totally separate.  His wife has her own retirement account, he has his.  His wife has her own checking and savings, he has his.  They pay fifty-fifty for expenses and each buy their own ""toys"" from their own accounts.  He views this as valuable for allowing them to have their own personal finance styles, as his wife is a very conservative investor and he is more generous. My spouse and I have mostly combined finances, and view all of our money as joint (even though there are a smattering of accounts between us with just one name on them as holdovers from before we were married).  Almost all of our purchasing decisions except regular groceries are joint.  I couldn't imagine it any other way.  It leaves us both comfortable with our financial situation and forces us to be on the same page with regards to our lifestyle decisions.  There's also the ideological view that since we believe marriage united us, we try to live that out.  That's just us, though.  We don't want to force it on others. Some couples find a balance between joint accounts and his and her fun money stashes.  You might find yet another arrangement that works for you, such as the one you already described. What's going to be important is that you realize that all couples have the same six basic arguments, finances being one of them.  The trick is in how you disagree.  If you can respectfully and thoughtfully discuss your finances together to find the way that has the least friction for you, you're doing well.  Some amount of friction is not just normal, it's almost guaranteed." "I used to work in finance for a number of years and I believe some of the use of these cliches are context-relevant (as others have said), but I also think they are often used as a placeholder for an actual thought or point, when one is lacking. It is also quite jarring to hear these phrases for the first time, as I had when I first started working at an investment bank. I thought they were sealing themselves within their culture. I found it limiting and really suffocating. My (least) favorite was ""it is what it is."" I always wanted to say: ""When isn't it?""  In any event, I have been collecting articles like this for a while. I have an idea to write a short story about a newly minted undergrad (or MBA) joining a company and all the other characters *only* speak in these phrases and sentences. And the main character is forced to deal with his/her initial confusion and then struggles to decide whether to assimilate (drink the kool-aid, if you will) and then realize his/her ability to think and identify as an individual is being challenged, so he/she ultimately abandons that company/job/industry." A hedge fund is such a broad term as to not mean anything in practice. What do you find interesting in finance? Research that, understand that. Then go find the guys who are doing that and ask for a job and take it regardless of how much money it offers. The money is the yardstick, not the goal "&gt;&gt;You do realize that just because you quote the Bible doesn't mean you have morals.  Obviously, you didn't understand my point. The utopian ideal of everyone having the exact healthcare they require (or really desire) is the LEFT's standard. It's ignorance of Christian morality to say that's what their beliefs dictate.   &gt;&gt;For the record, wealth distribution is perfectly acceptable. Funny how Republicans hate it, but don't have a problem with ""trickle down economics"".  You're referring to crony capitalism in essence (favorable tax status). Now there's some real hypocrisy by both sides! I love my solar subsidized green electrcity almost as much as my subsidized gasoline!" "The complete opposite of ""sunk cost"" is the term ""unrealized gain""; until you sell it, then it is a ""realized gain"". There is also a term ""paper profit"" to point out the ephemeral nature of some of these unrealized gains." Thanks for that, it did help.   I think my issue is I don't work in finance itself, I'm a lawyer, and 'capital' generally has a very specific meaning in English company law, where it refers exclusively to shareholder capital.   I realise capital in finance terms includes both debt and equity investment. "I'm searching for a master's thesis topic in equity investment or portfolio management and I'd be grateful if someone could tell me what are the hot ""trends"" going on right now on the market? Any new phenomenons (like the rise of blockchain, etf... but more relate to the equity side) or debates ( the use of the traditional techniques such as Beta to calculate WACC for example ...) ?" "He's calculating portfolio variance. The general formula for the variance of a portfolio composed of two securities looks like this:  where w_a and w_b are the weights of each stock in the portfolio and the sigmas represent the standard deviation/risk of each asset or portfolio.  In the case of perfect positive or negative correlation, applying some algebra to the formula relating covariance to the correlation coefficient (rho, the Greek letter that looks like ""p""):  tells us that the covariance we need in the original formula is simply the product of the standard deviations and the correlation coefficient (-1 in this case).  Combining that result with our original formula yields this calculation:  Technically we've calculated the portfolio's variance and not it's standard deviation/risk, but since the square root of 0 is still 0, that doesn't matter. The Wikipedia article on Modern Portfolio Theory has a section that describes the mathematical methods I used above. The entire article is worth a read, however."