2026-01-15 · Kiveo Stock
FIFO vs LIFO vs Weighted Average: which cost basis method is right for you?
A practical comparison of the three main cost basis methods, when each is required, and how to switch between them in a free A-share portfolio tracker.
Picking a cost basis method isn’t just an accounting exercise — it changes the P&L number you see every day. Here’s how the three main methods differ and when to use each.
Why cost basis methods matter
In any A-share portfolio tracker, FIFO LIFO weighted average are the three cost basis methods you will encounter. The right choice depends on your tax situation, your trading style, and whether you want to match official brokerage statements. For most individual A-share investors, FIFO and weighted average produce the most intuitive P&L; LIFO is useful in volatile markets where you want to match recent prices.
Quick summary
| Method | Pairs sells with | Best for |
|---|---|---|
| Weighted average | All buys blended into one cost | Most retail investors |
| FIFO (First In, First Out) | The oldest buys | Tax compliance in some jurisdictions |
| LIFO (Last In, First Out) | The newest buys | Selling recent winners in volatile markets |
A worked example
You buy 100 shares at ¥10, 100 at ¥12, 100 at ¥14. You sell 100 at ¥15.
- Weighted average: cost = (10×100 + 12×100 + 14×100) / 300 = ¥12. P&L = 15 − 12 = ¥3 × 100 = ¥300.
- FIFO: sell matches the ¥10 lot. P&L = 15 − 10 = ¥5 × 100 = ¥500.
- LIFO: sell matches the ¥14 lot. P&L = 15 − 14 = ¥1 × 100 = ¥100.
Same trade, three different reported P&L. That’s why the method matters.
Switching methods
The Kiveo Stock dashboard lets you switch methods with one click — useful when comparing how your real return looks under each assumption. Note: switching doesn’t change your actual trades, only how realized P&L is computed.
What about realized vs unrealized P&L?
- Realized P&L is locked in when you sell.
- Unrealized P&L is paper profit/loss on shares you still hold.
The cost basis method only affects realized P&L. Unrealized P&L is always (current price − cost) × shares.
Try it
Open the Kiveo Stock dashboard and log a few trades. Switch between FIFO, LIFO and weighted average in the settings panel to see how your numbers change.