Example
Input: 10 @ $100, 10 @ $80
Result: $90.00 Average
Step-by-Step Guide
- First Buy – Enter shares and price of initial purchase.
- New Buy – Enter shares and price of the new purchase.
- Calculate – The tool computes the weighted average.
- Result – New cost basis per share.
What is Stock Average Cost Calculator?
The Stock Average Cost Calculator helps investors determine the average price paid per share when multiple purchases are made at different prices. This strategy, known as Dollar Cost Averaging (DCA), allows investors to lower their cost basis and reduce the impact of volatility.
⚠️ Note: This tool provides financial estimates. It is not a substitute for professional advice. Always verify with a certified accountant or advisor.
How it Works
It calculates the weighted average:
$ \text{Avg Price} = \frac{\sum (\text{Price} \times \text{Quantity})}{\text{Total Quantity}} $
FAQ
What is DCA?
Dollar Cost Averaging: investing fixed amounts regularly regardless of price.
Is averaging down risky?
Yes, if the stock fundamentals are bad, you are just 'catching a falling knife'.
Does this include fees?
Ideally, add commission fees to the total cost for accuracy.
Tax implications?
Your cost basis determines capital gains tax when you sell.
FIFO vs Avg?
Tax reporting often uses First-In-First-Out, but Avg Cost is useful for strategy.
Conclusion
Knowing your average cost is essential for deciding when to sell or accumulate more. 'Averaging down' can lower your break-even point, making it easier to turn a profit when the stock recovers.