How to use it
- Choose “Drop %” and enter how far the share or fund has fallen, or choose “Prices” and enter what you paid and the price now. Prices can be in pence or pounds, as long as both are the same.
- Enter an expected yearly return (8% unless you change it) to estimate how long a recovery might take.
- Open the averaging section and enter the shares you hold and the shares you would add now to see your new average price and the rise still needed.
The top result is the rise needed to break even. Below it are the years to recover, your average price after buying more and the rise needed then, and a table from a 5% to a 99% fall.
How it is calculated
- Rise needed: after a fall d the holding is worth (1 − d), so it must rise 1 ÷ (1 − d) − 1.
- Years to recover: at a steady yearly return r, years = ln(1 ÷ (1 − d)) ÷ ln(1 + r). With a return of 0 or less it never recovers.
- Averaging down: new average = (shares held × purchase price + shares added × current price) ÷ total shares; new rise needed = average ÷ current price − 1.
Example
You bought 1,000 shares at 250p (£2,500) in a stocks and shares ISA, and they now trade at 175p, worth £1,750:
| Result | |
|---|---|
| Fall | 30% |
| Rise needed to break even | 42.86% |
| Time to recover at 8% a year | about 4.6 years |
| Average price after buying 1,000 more at 175p | 212.5p |
| Rise needed after averaging down | 21.43% |
Averaging down halves the rise you need here, but you now have £4,250 in the shares instead of £2,500.
Notes
- Pure arithmetic: no dealing charges, stamp duty, platform fees, tax or dividends. Your platform or broker statement is the final word.
- A steady return is a simplification. Real markets go up and down, and an individual share may never recover.
- Averaging down doesn’t erase a loss; it lowers your average price while putting more money at risk. Spreading money across many companies, for example with a tracker fund, lowers the chance that one share wipes out your savings.
- For how regular saving or investing grows over time, see the compound interest calculator.
- This is not financial advice. If you are unsure, the government-backed MoneyHelper service has free guidance, or speak to an FCA-regulated financial adviser.