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Share Average Price Formula:
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Share Average Price (AP) represents the average cost per share of an investment. It's calculated by dividing the total amount invested by the total number of shares owned. This metric helps investors track their cost basis and evaluate investment performance.
The calculator uses the average price formula:
Where:
Explanation: This simple division gives you the average price you've paid for each share in your portfolio, which is particularly useful when you've purchased shares at different prices over time.
Details: Knowing your average share price helps determine your break-even point, assess investment performance, make informed decisions about buying more shares, and calculate potential profits or losses.
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 compute your average price per share.
Q1: Why is average price important for investors?
A: It helps investors understand their cost basis, which is essential for calculating returns, making tax decisions, and determining when to sell investments.
Q2: How does dollar-cost averaging affect average price?
A: Dollar-cost averaging (investing fixed amounts regularly) typically results in a lower average price than the arithmetic mean of purchase prices, as you automatically buy more shares when prices are low.
Q3: Should I include fees in my total investment?
A: Yes, for accurate average price calculation, include all commissions and fees paid to acquire the shares in your total investment amount.
Q4: How often should I recalculate my average price?
A: Recalculate after each purchase to keep track of your current average cost basis, especially if you're adding to your position over time.
Q5: Does average price help with tax planning?
A: Yes, knowing your average cost basis is crucial for calculating capital gains taxes when you sell shares, particularly if you've made multiple purchases at different prices.