Calculating how many shares of stock you can buy with your cash on hand can be a little tricky when you are in a rush. Take it from me, I goof on the math from time to time. To help reduce errors, I created a simple stock purchase calculator spreadsheet.
I started collecting extra cash in a savings account so that I could buy a “lot” of stock once I get to a reasonable amount of money. When you buy mutual funds you generally buy based on a dollar amount. When you buy individual stock shares, the trading company makes you do the math to figure out how many shares you want to buy. During one a previous stock purchase, I made a mistake on the math so I bought a share or two less than I could have. This means I missed out on extra quarterly dividends. To help automate the math in the future, I created my own stock purchase calculator in Google Sheets.
Why you need a stock purchase calculator
When you are buying stock, the price is generally moving. This moving target can make it difficult to calculate and recalculate the math quickly. Your frustration also increases when you press the wrong buttons on the calculator. When you’re buying stock through a traditional brokerage house, you are generally required to give them the whole number of shares that you want to buy.
Technically the math is simple. Take the cash you have available to make the purchase (less the commission), and then divide by the current price of the stock. Round that number down and you have the number of shares you can buy.
That price per share is constantly moving up or down, making the math a moving target (especially if you’re close to having enough money for an additional share). When you’re calculating the math manually, like I did, it’s easy make an error.
To keep myself from making the mistake again I made a simple stock purchase calculator spreadsheet in Google Sheets to automate the math for me. All I have to enter is the amount of money I want to spend, commission per purchase and the symbol. Google Sheets has a nifty function that pulls in financial details including current price. The price may be a little delayed, but it’s enough to give me a gut check on how many shares I can buy instead of fumbling with a calculator and putting in the numbers in wrong.
What I put into my stock purchase calculator
In addition to the shares that I can purchase based on the current price and the cash I want to spend, I also wanted a quick FYI on the dividend returns for the quarter and year. I also included the current yield (annual dividend divided by current price per share) as this helps me figure out if I’m guessing a good deal for my dollars.
Using JNJ as an example (not what I purchased), you can see if I had $1000 to spend how many shares I could buy along with what I might expect from a quarterly and annual dividend return.
What else would you want in your stock purchase calculator to know when you’re double checking your math before you make a stock purchase?
Besides the basic math and dividend information, especially if you are also a dividend focused investor, what other information would be helpful? Or at the time you’re making a purchase, have you already decided on the specific stock versus comparing between multiple companies?