Tax, fees & accounts
Average cost
Treating all purchases of one security as a single pooled holding at a blended price.
How it works
Average cost simplifies record-keeping and is mandatory in some jurisdictions and for many funds. Every share is treated as having the same basis.
It removes the ability to choose which lot to sell, and with it a legitimate tax planning option.
Formula
Average cost per share = total amount invested ÷ total shares heldRelated terms
- Cost basisWhat you actually paid for a holding, including fees — the number every gain or loss is measured from.
- Tax lotOne purchase of a security, tracked separately with its own date and price.
- FIFO and other lot methodsThe rule deciding which purchase you are treated as having sold, when you own several.
- PositionEverything you currently hold in one investment, however many separate purchases built it up.
Mentioned in
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All 11 Tax, fees & accounts terms · The full glossary, 433 terms
Educational reference only. Nothing here is investment advice or a recommendation to buy or sell anything, and tax treatment depends on your own circumstances and the country you are in.