Cost basis is what the tax authority considers your starting point for an investment. Sell for more than the basis and the difference is a taxable gain; sell for less and you may have a deductible loss.
For funds you buy over time, cost basis can be tracked lot-by-lot. Choosing which lots to sell first (highest-cost, lowest-cost, or specific ID) can materially change the tax bill.
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Open Financial OS →Frequently asked questions
What is FIFO cost basis?
First In, First Out. Older shares are considered sold first. It's the default at many brokers.
Related terms
Capital gain
The profit made when you sell an investment for more than you paid.
Tax-loss harvesting
Selling investments at a loss to offset capital gains and reduce tax owed.
Wash-sale rule
A rule that disallows a tax loss if you rebuy the same or 'substantially identical' security within 30 days.
Capital gains
Profit from selling an asset for more than its purchase price.