Share market investments are made over time. Thus, it can be challenging to find out the exact cost of each share that you purchase. For this, you must know the exact price of the shares you have purchased.
The average stock price is crucial for assessing portfolio performance, implementing cost-reduction strategies, and making informed decisions.
The stock average calculator offered by discount broker websites and others comes to the rescue here. It assists you in finding out the average cost of shares bought at different prices.
Want to know more about this calculator? Read on to find out.
What is the Stock Average Calculator?
A stock average calculator is a digital tool designed to calculate the average price of stocks purchased over time. The tool helps you determine the cost of shares you have purchased, taking into account the quantities and prices.
This tool simplifies the calculation by taking into account the same shares purchased by you over time at different prices.
How Does the Stock Average Calculator Work?
The stock average calculator determines the average price of stocks based on the input provided by the user. It considers the number of shares and the price per share to calculate the average price of shares. The tool uses the following formula:
Average Cost Per Share = Total Shares/Total Cost
Here are the steps it follows:
Step 1: Data Input- Feed the required data into the calculator, such as the number of shares, prices, etc.
Step 2: Cost Calculation- To arrive at the cost of each purchase, multiply the number of shares by the price per share. It then sums the total purchase price.
Step 3: Number of Shares Calculation- Next, the calculator sums up all the shares bought at different times.
Step 4:Average Cost Calculation- Lastly, the total cost of shares is divided by the total number of shares to arrive at the average cost per share.
Let us consider an example to understand the calculation.
Suppose you have bought 300 shares of a company at ₹400 each. Later, you buy 250 more shares of the same company at a price of ₹550 each. The average cost of the shares will be calculated as follows.
Average Cost= (300*400+ 250*550)/(300+250)
= ₹468.18
Stock Average Calculator: Benefits
- Simplification: The stock average calculator simplifies the calculation of average cost, as you only have to input the required value and submit.
- Accurate Calculation – The calculator is an automated tool that provides accurate answers. It reduces the chance of error that may occur during manual calculations.
- Decision Making- By finding the average cost of each share, you can make informed decisions about your portfolio. You can decide whether you want to buy more shares, sell them or hold them to improve the gains.
- Risk Management- The calculator assists you in managing the risks by calculating the average price of shares. You can gauge the market volatility and adjust the portfolio as needed.
Summary
The stock average calculator is an excellent tool to help you find out the average price of your stocks. All you have to do is input the required details and your average stock price will be displayed within seconds.
Using the calculator, you can manage your investments efficiently and make decisions for maximising the profits and minimising the risks.
Santosh Kumar, the author behind IndiasStuffs.com, is passionate about sharing valuable insights on a variety of topics, including lifestyle, technology, and Indian culture.
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