Explore commonly used personal finance terms.
Average cost basis is a method used to calculate the average cost of assets bought at different times and prices, such as stocks or mutual funds. It involves adding up the total purchase costs and dividing by the total number of units bought, simplifying tax reporting and capital gains calculations. This method is often used for investments with multiple purchases, as it provides a straightforward way to calculate gains or losses when assets are sold, helping investors track the performance of their investments over time.
