Formula for Calculating Price per Share
With the following handy formula, you can compare what you would have paid per share using different investment strategies. This is the formula used to compare the results of buying a fixed number of shares per month to purchasing a fixed dollar amount of shares per month.
You can determine your average price per share (what you paid) with this formula:
If you purchased the same number of shares of an investment each month over several months, you would pay more per share than if you had invested that same total amount of money divided equally over the same number of months. The reason? You would actually buy more shares using the dollar cost averaging method.
Dollar cost averaging gives you an advantage because it helps reduce the average price you pay. This is true because the dollar cost averaging method takes advantage of the fluctuation in price.