Stock Average Down & Cost Basis Calculator
Compute your blended average share price when buying multiple stock purchase lots.
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How to Use the Stock Average Calculator: Average Down & Cost Basis
- 1Input the number of shares and price per share for your initial purchase lot.
- 2Enter the share count and price per share for your second purchase lot.
- 3Add optional additional purchase lots if applicable.
- 4Review your new weighted average price per share and total invested capital.
Formula & How It Works
Weighted Average Price Formula
Calculates volume-weighted average price across all purchase transactions.
Worked Examples
Averaging Down 50 Shares at $120 with 75 Shares at $95
Input: Lot 1: 50 shares @ $120, Lot 2: 75 shares @ $95
Explanation: Adding 75 shares at $95 lowers your overall breakeven cost basis from $120 down to $105 per share.
Frequently Asked Questions
What does averaging down mean in stock investing?▼
Averaging down is purchasing additional shares of a stock after its price has declined, lowering your overall average cost basis per share.
Does averaging down lower my investment risk?▼
It lowers your breakeven price point, but increases your total dollar exposure to that specific stock.
How does FIFO vs Specific Identification affect cost basis?▼
First-In, First-Out (FIFO) sells your oldest shares first, while Specific Identification allows you to choose exactly which lots to sell to manage capital gains.
What is Dollar-Cost Averaging (DCA)?▼
DCA is an investment strategy where you invest a fixed dollar amount at regular intervals regardless of share price, buying more shares when prices are low.
Quick Reference & Conversion Table
| Initial Lot | Second Purchase Lot | New Average Price | Reduction from Initial |
|---|---|---|---|
| 100 shares @ $100 | 100 shares @ $80 | $90.00/share | -10.0% |
| 100 shares @ $100 | 200 shares @ $70 | $80.00/share | -20.0% |
| 100 shares @ $100 | 100 shares @ $50 | $75.00/share | -25.0% |
| 100 shares @ $100 | 300 shares @ $60 | $70.00/share | -30.0% |
⚠️ Common Pitfalls to Avoid
- •Taking a simple average of share prices ((120 + 95) / 2 = 107.50) without weighting by the number of shares purchased in each lot.
- •Averaging down indefinitely on fundamentally deteriorating companies.
💡 Practical Real-World Uses
- •Dollar-cost averaging (DCA) into index funds and blue-chip equities over time.
- •Managing cost basis and identifying realistic price targets for exit strategies.
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