# How to Calculate the Average Price of Your Stock Positions

Most investors never buy an entire allocation to a stock in one purchase. Instead, many investors choose to ease into a position. Some might dollar-cost average into a stock by investing a set amount of money, on a set day, over a set period of time. Others choose to buy in thirds or some other fraction. In addition to that, investors often will buy more of a stock when it has been unjustly sold off by the market or because they believe in its potential. Overall, most investors feel more confident when averaging into a position because it is not only a disciplined approach to take, but it helps to reduce their overall risk because this approach helps to smooth out some of the market's volatility.

That being said, averaging into a stock does require a bit more work. Not only do investors need to decide which path they'll take to average into a position, but each subsequent investment changes the breakeven point of the position, which is the average cost paid for a stock. It's an important number to know and one that is pretty easy to figure out. It just requires a little bit of spreadsheet magic.

Let's suppose you're finally ready to start investing, but smartly choose to ease into your first investment. You've chosen a conservative first investment, the venerable Blue Chip (ticker: BLUC) and decided to invest \$250 a month, on the first trading day of the month over the next six months. While the stock was trading for \$25 per share at that initial investment, it moved around quite a bit over the next few months due to a market meltdown and subsequent recovery. While that volatility made you uneasy, you stuck with the plan and now want to know what your breakeven point is given that your purchase prices were all over the map.

There are just a few simple steps to figure out this price:

1. In the spreadsheet program of your choice, or by hand if that suits your fancy, make columns for the purchase date, amount invested, shares bought, and average purchase price.
2. Fill in the data for the first three columns from your brokerage statements.
3. Sum the amount invested and shares bought columns.
4. Divide the total amount invested by the total shares bought. You can also figure out the average purchase price for each investment by dividing the amount invested by the shares bought at each purchase.
5. Voila! You now have your average purchase price for your stock position.

Here's a sample of what that would look like on a spreadsheet:

Purchase date

Amount Invested

Shares Bought

Average Purchase Price

January

\$250.00

10

\$25.00

February

\$250.00

12

\$20.83

March

\$250.00

15

\$16.67

April

\$250.00

12

\$20.83

May

\$250.00

11

\$22.73

June

\$250.00

9

\$27.78

Total

\$1,500.00

69

\$21.74

In this example, dollar-cost averaging paid off by netting a much lower average purchase price than the initial investment. While that's not always the way it works, the key point to understand is that by figuring out the average price of a stock position, you'll now have a firm grasp on that position's breakeven point and be able to easily figure out the investing returns.