Silly question. New to all of this. I have some stocks in one company but brought at different price points. The app tells me average price. Let’s say i wanted to sell just some of these stocks, but may be select specific ones to get a specific yield/profit. I thought this would be possible. But when you put in a sell order on the app, it just asks you to select number of stocks to sell, but not which shares. So obviously based on this and any currency conversion the actually profit could be difficult to calculate in advance. I hope this makes sense and some one can help
Why do you care? It makes no difference to your wealth which shares are sold.
Different counties have different rules for computing taxable capital gains. To base gain calculation on average cost is common (eg UK). It is impossible for a broker to compute “a result” that works for the tax circumstances or preferences of every investor. If you care about about tracking the profit due to a particular traunch of share purchase it is best to keep your own records in a spreadsheet.
As Richard mentioned there is no significance in “which share you sell” for accumulated wealth, so there is no point in picking which one to sell.
2nd for tax purposes every country that I know of uses FIFO (first in first out) and this is actually often more advantageous than LIFO (again for tax reasons). IRS (USA) is one of the exceptions for this where you can sell in lots and use either FIFO or LIFO under different circumstances.
is there any particular reason you are trying to sell a specific LOT?
But HMRC (UK) does not use FIFO, no? Gains are to be computed using the average price in the Section 104 holding, which consists of all shares purchased on previous days. (Except when shares are purchased the same day or within 30 days after a sale; then the cost of those shares provides the basis cost.)
assuming they are all bought after 2008 you are correct @Richard.W
The shares you dispose of first are still the first ones you bought so FIFO still applies but the cost will be calculated on average price. again with the assumption that they are all bought after 2008
there are two exceptions for average price “same day rule” and “30 day rule” but even in 30 day rule FIFO still applies.
eidt: uhh i am a bit confused pre-2008 exception might apply to disposals rather than acquisitions.
but TLDR average price is good enough in majority of cases unless @NP212 has a specific situation.
Thanks both
That has been very useful and i know get it. It was just hypothetical. I just didn’t understand the mechanics of selling shares in terms of price purchased. I have googled section 104 holding and seen the relevant information now.