Average price calculator

Average price = total amount paid ÷ total shares. For each purchase, multiply shares by price, add those together, then divide by all the shares.

A simple average of $150 and $120 is $135, but that pretends you bought the same number of shares each time. The weighted average counts every share, so it matches what you really paid.

Yes. Many brokers sell fractional shares. 2.5 shares at $400 and 1.5 at $440 cost $1,660 for 4 shares, an average of $415.00. The same math works for ETFs and mutual funds.

Fees are part of what you paid, so they belong in the cost. Say you buy 10 shares at $50 with a $5 commission. The purchase cost you $505, not $500, so your price per share is $50.50. A second buy of 10 shares at $40, also with a $5 fee, costs $405.

Without fees, those two purchases are 20 shares for $900, an average of $45.00. With fees they are 20 shares for $910, an average of $45.50. Fifty cents a share looks small. On a stock you hold for years, it is the difference between the gain you think you made and the one you report.

The IRS generally counts purchase costs such as commissions in your cost basis.² Many brokers now charge $0 per trade, but if you paid a fee, add it to that row’s price per share before you enter it. Divide the fee by the shares in that purchase: $5 on 10 shares adds $0.50.

Only if the reason you bought still holds. A lower average does not make the investment any safer; it just means you own more of it. If the price fell for a good reason, buying more can deepen the loss. Ask whether you would buy at today’s price if you owned none.

Investing a fixed dollar amount on a schedule, called dollar cost averaging, buys more shares when prices are low and fewer when they are high.¹ It does not guarantee a profit or protect against losses, but it takes timing decisions out of your hands.

Buying more at a lower price cuts the gain you need to break even. Own 100 shares bought at $100 and the price falls to $50, and you need a 100% rise to get back to even. Buy 100 more at $50 and your average drops to $75. Now a 50% rise, from $50 to $75, gets you back to even.

The cost is that you have more money riding on the same company. You started with $10,000 in it. After the second purchase you have $15,000 in it. If the price falls another 20%, to $40, your 200 shares are worth $8,000, a loss of $7,000. Had you not bought more, your 100 shares would be worth $4,000, a loss of $6,000.

So averaging down helps only if the price recovers. A lower average is a result of the purchase, not a reason for it. The question that matters is whether the business is worth more than $50 a share, which this calculator cannot tell you.

Often it is close, but not always. Your cost basis usually includes fees and can be adjusted by events like stock splits and reinvested dividends.² For stocks, the IRS also lets you choose which shares you sell, which changes the gain you report. Check your broker’s cost basis records against your own purchase and adjustment records.

• Fees. Add commissions to the price if you want them in the average.
• Sales. Selling shares changes what you own; the calculator only adds purchases.
• Splits and other corporate actions. A 2 for 1 split doubles your shares and halves your average.

It depends on the method used, and the choice changes your taxable gain. Suppose you bought 10 shares at $150 and later 5 at $120, an average of $140, then sell 5 shares at $160.

• Earliest shares first: if you do not identify the shares, the IRS treats the earliest ones as sold.⁴ Five of the $150 shares give a $50 gain.
• Specific shares: if you can identify the $120 shares, the gain is $200.
• Average basis: allowed for mutual fund shares bought at different prices. At $140, the gain is $100.

Your broker sets a default method, and you can usually change it before you sell. One more trap: if you sell at a loss and buy substantially identical securities within 30 days before or after, the wash sale rule can disallow that loss.⁶ Averaging down right around a loss sale can trigger it.