Average Cost vs. FIFO vs. Specific Lots
Three ways to figure the cost basis of shares you bought at different prices. How each method works, what it does to your gain, and when each one fits.
4 min read
Read article →Category
Concepts
The ideas behind the numbers: cost basis, realized vs. unrealized, and more.
The vocabulary of investing is mostly ordinary ideas wearing formal clothes. Cost basis is what you paid. An unrealized gain is profit you have not collected yet. These posts explain the terms in plain English, with a worked example each time, so the numbers on your statement stop being decorative.
Understanding them is not academic. Cost basis is what your gain is measured from, so getting it wrong makes every performance figure wrong too. We explain the mechanics and stop short of advice: what any of it means for your tax return is a question for a tax professional.
Total Return vs Price Return: What's the Difference?
Price return counts only the share price. Total return adds dividends back in. The gap between them is bigger than most investors expect over time.
3 min read
Read article →What Is an Unrealized Gain or Loss?
An unrealized gain is profit on paper. A realized gain is profit you locked in by selling. Here is the difference, why it matters, and how each is taxed.
4 min read
Read article →What Is Cost Basis? Definition, Formula and Examples
Cost basis is what you paid for a holding, and it sets your taxable gain. Here is how it works, how averaging and lots change it, and why it matters.
5 min read
Read article →