How to Determine the Cost Basis for Mutual Funds


Determining the cost basis of a mutual fund is easy if you have the right information. That information is the cost of the stock on the day of the original purchase and the number of shares purchased. You can then find the cost basis for your mutual fund with these two data points in a spreadsheet.

Create a spreadsheet with five columns. Call the first Column "Transaction Date." Call the second Column "Price." Call the third, fourth and fifth columns "Number of Shares," "Cost Basis Per Share" and "Investment Comments," respectively.

Gather all information, including settlement and dividend statements. Starting with the first "Transaction Date," input this data into the spreadsheet. The "Price" is the price at which the mutual fund was purchased. Also, input the number of shares purchased for each purchase. If you invest $250 at the beginning of each month, put $250 here, along with the number of shares it bought.

Input the dividend reinvestment. In the spreadsheet, under Investment Comments, put Dividend Reinvestment to mark the transaction as different from a regular buy or sell event. Input the number of shares the dividend purchased and the respective purchase price.

Calculate the cost basis for reinvested dividends. The "Cost Basis" is the "Price" / "Number of Shares." Each transaction will have its own cost basis.

Calculate average cost basis per share by dividing the sum of the "Price" by the sum of the "Number of Shares." This number can be used to keep a running average tally of capital gains or losses throughout the year.

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