1. What is Average Cost Per Share?

Average Cost Per Share is a financial metric used by investors to determine the average price paid for each share of a stock or investment. It's calculated by dividing the total amount invested by the total number of shares owned.

2. How Does the Calculator Work?

The calculator uses the simple formula:

Where:

• Total Cost — The sum of all money invested in purchasing shares ($)
• Total Shares — The cumulative number of shares acquired (unitless)

Explanation: This calculation helps investors understand their true cost basis for tax purposes and investment performance analysis.

3. Importance of Calculating Average Cost

Details: Knowing your average cost per share is essential for making informed investment decisions, calculating capital gains or losses for tax reporting, and evaluating the performance of your investment strategy over time.

4. Using the Calculator

Tips: Enter the total amount you've invested in dollars and the total number of shares you own. Both values must be positive numbers. The calculator will automatically compute your average cost per share.

5. Frequently Asked Questions (FAQ)

Q1: Why is average cost per share important for investors?
A: It helps investors determine their break-even point, assess investment performance, and calculate capital gains or losses for tax purposes.

Q2: How does this differ from dollar-cost averaging?
A: Dollar-cost averaging is the strategy of investing fixed amounts regularly, while average cost per share is the result of that strategy - the mathematical average price paid for all shares.

Q3: Should I include fees and commissions in the total cost?
A: Yes, for accurate calculation of your true cost basis, you should include all transaction costs associated with purchasing the shares.

Q4: How often should I calculate my average cost per share?
A: It's good practice to recalculate after each purchase to maintain an accurate understanding of your investment position.

Q5: Does this calculation work for multiple purchases at different prices?
A: Yes, this method automatically accounts for multiple purchases at different prices by using the total cost and total shares regardless of purchase history.