Shares weighted average and selling

[Steviejam]

Hello, I'm new to Forum and looking advice.

Pretty new to trading (about 2 years) mostly buy and hold so this is a recent problem.

I have bought shares in a particular company at 3 different times with all different share price values. My problem is if I sell some of these shares, how will I know which shares are being sold off and what I actually paid for them.

I'm not worried about this for capital gains tax purposes, the profit won't be anywhere near threshold. I just want to know how this could influence future gains / profits if the weighted average share price can fluctuate.

I've scribbled this hypothetical situation.
Ignoring trading costs / stamp duty.

Say I bought shares in company X:
100 shares at £1 / share: Cost £100
Later, 100 shares at £8: Cost £800
Then, 100 shares at £10: Cost £1000

Now share value sits at £9/share and I want to take £900 during a sell. At £9 / share I'd need to sell 100 shares.

My current weighted average is: £6.33 / share (300 at cost £1900)

If I sell the 100 shares I bought at £8/share I will now hold 100@£1 and 100@£10 (weighted average now 200/£1100 initial investment = £5.50)

If I sell the 100 shares I bought at £10/share I will now hold 100 @£1 and 100@£8 ( weighted average now 200/£900 initial investment =£4.50)

Is this correct and what would this mean for future profits, breakeven point and portfolio value to share price fluctuations?

Have I got something fundamental wrong?

 

[Trader333]

The way you have calculated it at £6.33 is the only sensible way of doing it in my view as it all comes down to money out and money in and that is all that matters.

 

[BigDeal]

You absolutely have to calculate and use the average buy prices, and when you sell your partial holding, you still record the remaining shares using the average price. otherwise your P&L will become messy and potentially inaccurate.
Further, in the event you become liable for CGT, this is the way you will need to calculate your buy price