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How is my cost calculated?

The cost figures shown for investments held within the HL Service are based on the total number of units/shares held, multiplied by the average cost price (including dealing charges and stamp duty) of all purchases in the stock. The average cost price is calculated by reference to purchases only; it makes no reference to sales.

For example:

  • Investor buys 5,000 shares for £1 each at a cost of £5,000
  • Average cost price: total purchase costs (£5,000) divided by total number of shares purchased (5,000) = £1 per share
  • Cost of holding: total number of shares held (5,000) multiplied by average cost price (£1) = £5,000
  • Share price rises and investor buys another 2,500 shares for £3 each at a cost of £7,500
  • Average cost price: total purchase costs (£5,000 + £7,500) divided by total number of shares purchased (5,000 + 2,500) = £1.67 per share
  • Cost of holding: total number of shares held (7,500) multiplied by average cost price (£1.67) = £12,500
  • Share price rises further and investor sells 3,750 shares (half of their holding) for £4 each raising £15,000
  • Average cost price remains unchanged
  • Cost of holding: total number of shares held (3,750) multiplied by average cost price (£1.67) = £6,250
  • Share price continues to rise and investor buys 2,000 shares for £10,000
  • Average cost price: total purchase costs (£5,000 + £7,500 + £10,000) divided by total number of shares purchased (5,000 + 2,500 + 2,000) = £2.37 per share
  • Cost of holding: total number of shares held (5,750) multiplied by average cost price (£2.37) = £13,627.50

The gain/loss figure shown on your investment report is the difference between the cost of your shares or units (calculated in line with the above method) and their market value on the date that the report was compiled.

Please note that equalisation can alter the way the average cost price is calculated, as will the sale of the entire holding. Please contact us if you would like further details.

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