Hi!
When selling part of an asset, the purchase price (FIFO) value is decreased. Maybe there is something I didn’t understand about this method, but shouldn’t the mean purchase price remain the same even if the position is being reduced? In my broker the mean purchase price remains the same after the sell.
Thanks in advance.
In can absolutely decrease in FIFO.
It is in the “Moving average” method, also named Adjusted Cost Base that a sell does not reduce the purchase price per share.
In FIFO you sell your share from the oldest ones. If your first bought shares were at a higher price than your remaining shares, your remaining shares will have a lower purchase price.
In Moving Average/ACB all your shares have the same purchase price. So when you sell, the remainings shares remain at the same purchase price.
You can plot on this graph the Moving Average purchase price. It should not decrease at your sell event.
Ok! Now I have a better understanding of it. Thank you for the fast response.
