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.