Cost basis is the original price or cost of an asset, while balance describes the total amount of that same asset. Put simply, cost basis measures how much money was spent to acquire an asset, and balance measures how much of that asset you own at a given time. To better understand the difference between these two important metrics, think about buying shares in a company. When you purchase those shares, your cost basis is the amount you paid for them. After that purchase, any subsequent changes to the value of those assets are reflected in their balance. The balance of an asset will fluctuate over time depending on market conditions, while the cost basis remains fixed.