Investing 101: The Importance of Investment Literacy Before Investing
Before making an investment decision, understanding the key components of investment literacy is crucial.
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Detailed breakdown of all your activities
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Get instant insights into your crypto portfolio by importing your data. Whether through our automated API connections or a simple CSV upload, you’ll receive a detailed breakdown of all your activities – from trades to earned interest.
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Smart decisions
Without measurement, there is no progress
Whether you’re actively trading cryptocurrencies, earning staking rewards, or simply have diamond hands, tracking your portfolio’s performance is essential for smart decision-making.
Generate as many profit reports as you wish to keep an eye on your performance or declare taxes on your capital gains.
Choose between FIFO or Weighted Average methods
Two of the most common calculation methods to give you accurate results on your trades. Use the results to complete your annual mandatory income tax returns.*
The First In, First Out (FIFO)
FIFO method assumes the first cryptocurrency units you purchased are the first ones you sold.
Here’s how the gain is calculated for a specific scenario:
| Action | Calculation | Result |
|---|---|---|
| Sale Price | $35,000 × 0.5 | $17,500 |
| Cost Basis | $20,000 × 0.5 | $10,000 |
| Taxable Gain | Sale Price − Cost Basis | $7,500 |
Weighted Average Cost (WAC)
WAC method calculates your crypto cost basis by dividing the total amount spent by total units held.
This example demonstrates how the cost basis and gains are calculated:
Step 1: Calculate the Average Cost Basis
If you buy 1 BTC at $20,000 and 1 BTC at $30,000, your cost basis would be:
| Action | Calculation | Result |
|---|---|---|
| Total Cost | $20,000 + $30,000 | $50,000 |
| Average Cost per BTC | $50,000 ÷ 2 | $25,000 |
Step 2: Calculate Gains/Losses for the Sale
If you sell 0.5 BTC when the price is $35,000, the calculation would be:
| Action | Calculation | Result |
|---|---|---|
| Sale Price | $35,000 × 0.5 | $17,500 |
| Cost Basis | $25,000 × 0.5 | $12,500 |
| Taxable Gain | Sale Price − Cost Basis | $5,000 |
*Always consult a tax consultant before filing your tax returns.
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Frequently Asked Questions
Can I use the Profit Report to declare taxes in my country?
The Profit Report can help you track your trading gains and losses, but tax requirements vary by country. While our reports follow standard calculation methods (FIFO and WAC), we recommend consulting with a tax professional in your jurisdiction to ensure compliance with local regulations.
Do I have to pay taxes if I lost money trading cryptocurrencies?
Generally, trading losses can be used to offset other capital gains and, in some cases, a portion of your regular income (subject to local tax laws). Even if you experienced losses, you should still report your cryptocurrency trading activity on your tax return. Consult a tax professional for specific guidance.
Can I generate a report for last year?
Yes. Our calculator goes as far back as 2020 depending on the data you import.
How can I be sure of the accuracy of the report?
Our system automatically processes your trading data using industry-standard calculation methods. However, the accuracy depends on having complete transaction records. We recommend:
- Regularly importing your trading data
- Verifying that all exchanges and wallets are connected
- Cross-checking transaction dates and amounts
- Keeping original trading records for reference
Do you have other exchanges available?
As we grow as a company we will add more and more exchanges over time. If you have any specific exchanges or wallets you would like to see, please do not hesitate to drop us a hint at support@investor2.com
What if I am missing some transaction data?
Missing transactions can affect the accuracy of your profit report, especially when you upload a CSV file. In some cases when you transfer crypto from another source into an exchange the correct buy price is may be different, affecting the overall results. If you notice gaps in your data, you can manually edit the transaction file you import to reflect the correct data.
Is it really free?
Yes, of course! We do not require you to enter any credit card details as well and the Profit Report Calculator is free to use as many times as you wish. Our aim is to provide you with a simple and an effective tool to keep an overview of your performance.
