Average Cost Basis Method
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Definition of 'Average Cost Basis Method'A way of calculating cost basis when figuring out gains or losses from a sale of mutual fund shares. This is done by adding up the number of shares owned as well as the total dollar amount of the shares; the dollar amount is divided by the number of shares. This number (the average cost basis) is then multiplied by the number of shares sold and compared to the actual sale amount to compute a gain or loss. |
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Investopedia explains 'Average Cost Basis Method'Many mutual fund companies include an average basis number on the confirmation statement, which is mailed to the client whenever shares are purchased or redeemed. The shareholder is not required to use this method. |
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How do I figure out my cost basis on a stock investment?
The cost basis of any investment is the original value of an asset adjusted for stock splits, dividends and capital distributions. It is used to calculate the capital gain or loss on an investment ... -
How do you calculate the cost basis for a mutual fund over an extended time period?
Investors must pay taxes on any investment gains they realize. Subsequently, any capital gain realized by an investor over the course of a year must be identified when they file their income ... -
How do I calculate my gains and/or losses when I sell a stock?
To begin, you need to know your cost basis, or the price you paid for the stock. If you did not record this information, you should have an order execution confirmation and/or an account statement ... -
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