What is the cost basis for a mutual fund?

In its broadest sense, cost basis refers to the price you paid for your shares. That figure is adjusted upward for reinvested dividends and capital gains and any commissions or transaction fees you paid.

Are mutual funds LIFO or FIFO?

This average calculation provides you with a basis that you will use for all the shares, but the holding period for the shares that were just sold is determined on a FIFO basis. This method is most commonly used by mutual funds companies. The average cost of shares in each category is then computed separately.

Can I use average cost basis for mutual funds?

Average basis is the average cost of all shares you bought. You can use this method of figuring your basis only if you did both of these: Bought your mutual fund shares at various times and prices. Left the shares on deposit in an account handled by a custodian or agent (Ex: A broker or your mutual fund company)

How is the cost basis of a mutual fund calculated?

Average Basis: This is the default option for many mutual funds. In average basis, all of your shares in a mutual fund have the same cost basis. The fund company will add up the total cost of all the shares you own and divide it by the total number of shares you own.

How is FIFO calculated for a mutual fund?

FIFO is also calculated individually leaving them with their own cost basis. Mutual fund shares can also use an average cost option. This method allows investors to divide the total number of shares they have by the gains made, and the reinvested dividends.

Do you have to use average cost for covered mutual funds?

If you’d like to use Average Cost for covered mutual fund shares, you don’t need to do anything. Your mutual fund account will default to Average Cost for covered mutual fund shares unless you select another method.

How to set up a cost basis account?

To choose your cost basis method, log in to your account and use this online application. If you would like to keep Average Cost as your method, you don’t need to do anything, although you may confirm your choice of Average Cost online or by mail or fax.