Using Cost Basis When Evaluating Investments

Cost basis can be very important when evaluating your investments. In the simplest terms, your cost basis is how much you paid for an investment, the date you bought the investment and the number of shares you purchased. It is an important number to know because it determines your taxable gain or loss when you sell that investment in a taxable account.

For example, if you paid $1,000 for 50 shares of a security, your cost basis would be $20 per share. If you were to sell 50 shares a year later at $25 per share, you would have a capital gain of $250. This $250 needs to be reported to the IRS, so not keeping track of your cost basis could cause trouble for you, that is easily avoidable. So make sure you are aware and keep track of your cost basis on your investments.

Most investment firms keep track of your cost basis for you. We do! If for some reason you see N/A on your statement under purchase price, please call our office for we can help you figure out your cost basis and then track it for you.