![]() ![]() This is arguably the most common and important reason to know the cost basis of a stock. Is it too essential to calculate the cost basis for an investor? - Yes, it is.įollowing are a few reasons why you should regularly calculate your cost basis (stock average): 1) For taxation purposes Importance of calculating Stock Cost Basis With this tool, all you have to do is input appropriate details and get appropriate output, showing your average cost basis and cumulative cost basis with the help of an easy-to-understand table. Here comes the role of this fantastic Stock Average Calculator with DRIP. This plays a major role in making the calculation complex and exhaustive. This means every time your dividends are reinvested, you will owe taxes according to the amount. DRIPs make Cost Basis Calculation Complexĭividend Reinvestment Plans (DRIPs) involve multiple purchases of shares over time, often at different prices, and with different tax implications.ĭividends are usually considered taxable income in many countries. If it was so simple, why would you need this tool? There are some reasons as explained in the following section. Thus, the cost basis is given by a simple formula, Stock Cost Basis = (Total investment / Total number of shares). ![]() By saying stock cost basis, we usually refer to the average cost price of stock per share at the end of the holding period. However, rather than remembering large figures, it is better to know the average cost basis, which is the amount invested to acquire one share of the stock. This includes any additional commissions or fees paid to purchase shares, taxes on dividend income (specifically in DRIPs), etc. In other words, it is the total amount of money you put in overtime to acquire a certain amount of shares. The stock cost basis is the total investment made to buy shares of stock. What is Stock Cost Basis (Stock Average)? FAQs about calculating Cost Basis with DRIP. ![]()
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