(If you want a quick guide for beginners how to start investing in the Philippine stock market, you can download your free ebook here.)
How is Average Cost Computed in Your Stocks Investment Portfolio in COL Financial?
One of the beauties of the new COL Financial stocks trading platform is that it shows you the net values of your stock portfolio. This is inclusive of all the stockbrokers’ commissions and fees involved in buying and selling transactions in Philippine Stock Exchange.
That means, if you log-in to your COL Financial Trading account, and one day decided to just sell whatever stocks you have at their prevailing market prices, you’d get exactly whatever amount is shown in your computer screen.
You can get free excel file here that will compute the costs of your buying and selling transactions. You can also read this stocks investing tip that will help you maximize the fees involved and squeeze the most out of your hard-earned cash.
Now to answer our question in this blog, below is an easy guide in computing the average cost of the stocks you buy. It’s just like computing your grade average in schools, also known as general weighted average.
The basic formula is simple
Average Cost = Total Cost/Total Shares
We can expand this and break into its components.
Below is an example to demonstrate the use of the formula with BDO stock and COL Financial online stockbroker.
Some points about this average cost basing on the formula:
- Since this is dependent on stock’s price, it follows that every stock has its own average cost
- This takes into account the net costs including all the fees and charges.
I’m pretty sure your broker does all these calculations for you but it surely helps your appreciation of your investment knowing how the numbers in our trading screen are computed.
Have fun investing!
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