Are You Sure That You’re Making A Profit?

Photo by Alexander Grey on Unsplash

Nowadays, most of us are suffering from higher inflation (some of us even more ) and, trying to protect our money from inflation with different strategies. Some people buy commodities, others invest in various stock markets, cryptos, forex… etc.

And.. Of course, some of those assets lose or increase their values in time. So, we buy and sell. But, hold on…! Do you know if you’re really making a profit? Or how much actually you made?

Let’s take an example to see it better.

In the following Google Sheets document, you see the list of buying transactions of a certain investment product.

As the price went down, we could manage to decrease the average cost. So, it’s obvious that we’re gonna make some profit when the price goes up. But… what if we wanna sell some part of those when the price goes up?

Considering the average cost is about 95, selling a minority of those items for 97 is not that bad. But how much you made a profit actually? It’s not that right to give an answer by making calculations over the average numbers. Especially when there are buying/selling transactions.

Considering each buying/selling transaction may have different prices, our profit might be different for each.

Know The Cost First

Photo by Marcel Pirnay on Unsplash

It’s easy to calculate the cost unless selling something. But the nature of the business, you may sell or buy something in time according to the market. So, in this case, the cost would mean how much you paid for the assets currently you have.