Adjusted Cost Base is the term that is used to describe the average cost of shares that an investor has bought. This is necessary so that you (and the government!) know how much tax you owe when you sell your shares. If you bought all of your shares at one time, there is nothing to it. If, however, you accumulated your shares through several separate purchases, you have some math in your future, in the form of the average cost method.
Doing the math
If you’re not thusly inclined, the mathematics of investing can quickly get ahead of you. While you (might!) argue that some calculations that investors routinely do are not absolutely necessary to tracking your investing progress, determining your adjusted cost base is not one of them; there is nothing the bit least optional about being able to determine how much you paid for your stocks. You need to know so you can calculate your taxes. Fortunately, it’s not that difficult. (The math part, not the paying taxespart; sorry, no help there.)
HERE IS AN ARTICLE I WROTE OVER A YEAR AGO, BUT FOR SOME REASON NEVER PUBLISHED. (UNTIL NOW, OBVIOUSLY.)
One of the benefits of becoming more experienced in the investing game is that it usually leads to higher balances. My user account recently passed the threshold to where I am now a silver-level member of the 5-Star program at InvestorLine. With this new status, I have been given access to Level II Quotes and a few other perks. I will be breathing this rarefied air at least until next quarter, when my standing will be re-evaluated. Acquiring access to Level II Quotes, I have to say, is a goal I have had my eyes on for quite some time. Apart from the cachet of having attained the balance required for acceptance into this ever-so-exclusive club and the Level II Quotes, what perks do I get for passing muster, and how beneficial are they?
Apart from the Level II Quotes, there are three principal benefits:
With the advent of the Internet, stock investing was suddenly democratized. In a very few short years, it became possible for “regular folk” to invest directly in the stock market. Individual investors were no longer obliged to trade through a stock broker. Mutual funds didn’t need to be bought through a bank. Fees and returns could be compared easily. Information about companies financial situations was available for anyone who took the time to visit a company’s website and spend the time reading the vast quantities of information posted there. All of this is great; more information is always better, right?
Well, no. Especially when you’re getting started. Too much information quickly becomes confusing, and very shortly thereafter, overwhelming.
Like anything else, too much information is a bad thing. (Caveat: This is true unless you’re a professional investor, or investing is your chosen hobby.)