How to Calculate Average Stock Price

To keep track of your investments, it’s important to understand how to calculate an average stock price. If you like a stock, you’re probably not going to just buy it once and then never again. Investors often prefer dollar-cost averaging, putting a set amount of money into stocks at regular intervals. You can gradually increase your position this way while smoothing out some of the market’s volatility.

There is a little more work involved, though. Each investment will change the average price paid for the stock, which is your breakeven point. Fortunately, this is fairly easy to calculate. Here’s how to do it, step by step, based on how much you invest and how many shares you purchase.

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An infographic walking through the four steps of how to calculate average stock price. — Image source: The Motley Fool

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Data source: Author's calculations.

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In this case, dollar-cost averaging paid off. Since you didn’t invest all your money at once, you paid a lower average stock price. While that’s not always the way it works, spreading out your investments is a good strategy for dealing with market volatility.

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Knowing how to calculate an average stock price is a useful skill

When you’ve purchased shares of a stock multiple times, being able to figure out the average price you’ve paid comes in handy. You’ll have a firm grasp of your breakeven point and be able to figure out your investing returns.

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About the Author

Lyle Daly is a contributing Motley Fool stock market analyst covering information technology and cryptocurrency. Lyle has been a contributor at the financial services company since 2018. His work has been featured on USA Today, Yahoo Finance, MSN, Fox Business, and Nasdaq. Before joining The Motley Fool, he wrote for financial brands including Intuit.

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