# 🍑 Season to Taste

By [Let Them Eat Cake](https://paragraph.com/@ltecake) · 2022-06-18

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**TL,DR: Master basic investing concepts to get started**

**The Unripe Peach / Investment Lifecycle**

Investments work like an unripe peach. First you buy, then you wait, then you (hopefully) reap the rewards of waiting. The amount you spent to buy the products is called cost basis, calculated as the number of products purchased times the price of each product. If you end up with more money than you put in, this is called a capital gain, and if you end up with less, then you have a capital loss. Together, capital gains minus capital losses will determine overall earnings from investments, which once realized will be taxed or be tax deductible, depending on if the earnings are positive or negative.

**Consuming a Product / Realizing a Gain or Loss**

Realization reflects the moment of consumption-when you hopefully get money back from an investment. A realized gain occurs when you earn a profit from the sale of a financial product. A realized loss occurs when you lose money from the sale of a financial product. Buying a financial product may create unrealized gains or losses, but those are not relevant for tax purposes.

**Starving / Risk of not investing**

If you don’t eat, you will starve. If you don’t invest, you probably won’t starve immediately, but you never know what the future may hold. Given our economy’s propensity for inflation, not investing is often riskier than investing (see red line below).

![](https://storage.googleapis.com/papyrus_images/a5c5a60d1c955d50b3c0db5ee9e448bfb270327ca554f21d6d298da0453bada9.png)

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*Originally published on [Let Them Eat Cake](https://paragraph.com/@ltecake/season-to-taste)*