Calculating the cost basis of stock is essential for determining an investor’s financial health. Cost basis refers to the original purchase price of an asset, including any fees or commissions paid when you acquire it. It also includes any costs associated with carrying and trading the asset, such as storage or interest payments. By knowing your cost basis, you can gain insight into your return on investment (ROI) and make informed decisions about when to buy and sell stocks. Knowing your cost basis can be the difference between a profitable trade and one that causes financial loss.