1. What is Average Cost?

The average cost is the total amount invested in a stock divided by the number of shares owned. It helps investors track their investment performance and make informed decisions about buying or selling shares.

2. How Does the Calculator Work?

The calculator uses the average cost formula:

Where:

• Total Cost — Sum of all purchases (USD)
• Number of Shares — Total shares owned

Explanation: The equation calculates the mean price paid per share across all purchases.

3. Importance of Average Cost Calculation

Details: Knowing your average cost helps determine when to sell for profit, evaluate investment performance, and make tax decisions about capital gains.

4. Using the Calculator

Tips: Enter the total amount spent on stock purchases in USD and the total number of shares owned. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: How does average cost differ from current price?
A: Average cost is what you paid, while current price is the market value. The difference determines your profit/loss.

Q2: Should I include fees in total cost?
A: Yes, for accurate calculation include all commissions and fees paid to acquire the shares.

Q3: How does this work with multiple purchases?
A: Sum all purchase amounts (including fees) for total cost, and sum all shares bought for total shares.

Q4: What if I sold some shares?
A: The calculator works for current holdings. If you sold shares, only include the cost and shares you currently own.

Q5: Why is average cost important for taxes?
A: It helps determine your cost basis for calculating capital gains when you sell shares.