I collect extra cash in a savings account so I can buy a stock shares once I have a reasonable amount of money. When you buy mutual funds you buy based on a dollar amount. When you buy individual stock shares, the brokerage company requires you to buy whole shares and you’re usually on the hook to figure out how many shares you can afford to buy. During 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.
One quick note I should mention. I’m not a financial planning professional. I’m sharing what’s working for me as part of my investing strategy. Always do your own research and consider your own circumstances before making any financial decisions. You could also check with your favorite financial professional to understand what would be best for your situation.
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, as I did, it is easy to 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 the 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 the 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?