Calculating cost basis is an important step in understanding the financial performance of investments. Cost basis is basically the original purchase price of an asset, plus any additional costs incurred in acquiring or owning it. It takes into account things like transaction fees, commissions, and other costs related to the acquisition. By determining the cost basis of a security, investors can accurately calculate their return on investment (ROI) and make informed decisions about future investments. Understanding cost basis also allows investors to accurately measure their total tax liability when it comes time to pay taxes on capital gains. Calculating cost basis properly is an integral part of successful investing.