Stock Average Calculator
Bought the same stock at different prices? Enter the shares and price for each purchase to calculate your average cost per share, total shares, and total investment.
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How Stock Averaging Works
Your average cost per share is a weighted average. It accounts for the fact that you may have bought different quantities at different prices. The formula is simple: add up the total cost of all purchases, then divide by the total number of shares.
If you bought 50 shares at $100 and 30 shares at $85, your total cost is $7,550 and you hold 80 shares. Your average cost is $94.375 per share. If the stock currently trades at $95, you are slightly in the green overall even though your second purchase was at a lower price than the current market.
When to Average Down on a Stock
Averaging down means buying additional shares after a price decline to lower your average cost. It makes sense when you believe the drop is temporary and the company's fundamentals remain strong. Think of it as buying something on sale that you already know you want.
The risk is that the stock keeps falling. Professional investors often set rules like only averaging down once, capping the additional investment at a fixed percentage of their portfolio, or requiring specific fundamental criteria to be met before adding shares. Having a plan prevents emotional decision-making when prices are moving against you.
Average Cost and Tax Implications
Your average cost basis matters at tax time. When you sell shares, your capital gain or loss equals the sale price minus your cost basis. If you use the average cost method, every share you sell uses the same average price as the cost basis, which simplifies record-keeping.
The IRS allows you to use specific identification instead, where you choose which lot of shares to sell. Selling higher-cost shares first reduces your taxable gain. Mutual funds and ETFs typically default to average cost, while individual stocks default to first-in-first-out (FIFO). Check with your broker about which method applies to your account.
Frequently Asked Questions
What is the average cost per share?
It is the weighted average price you paid across all your purchases of the same stock. It equals your total dollars invested divided by your total number of shares.
Why does averaging down work?
When you buy more shares at a lower price, the lower-priced shares pull your average cost down. If the stock recovers above your new average, you profit on the entire position, not just the cheaper shares.
Is averaging down always a good strategy?
Not always. Averaging down on a fundamentally declining company means buying more of a losing investment. It works best when the price drop is temporary and the company's long-term prospects remain solid.
Does this include brokerage fees?
This calculator uses the share prices you enter. If you want to include commissions, add the fee to the total cost of each purchase before dividing by total shares.
How does dollar-cost averaging differ?
Dollar-cost averaging invests a fixed dollar amount at regular intervals regardless of price. Stock averaging here simply calculates the weighted average of purchases you have already made, regardless of timing.