Margin of safety

The discount-from-fair-value cushion that protects you when your fair-value estimate is wrong.

Fair value per share ($)

Current price ($)

Required margin: 30%

Buy price (your MoS)

$70.00

Current discount: 15.0%

Above your buy price by $15.00. Either lower the required margin, raise your fair-value estimate, or wait.

Formula

Buy price = Fair value × (1 − MoS%). A 30% margin means you only buy if the price is ≤ 70% of your fair-value estimate. Common ranges: 25–30% for stable compounders, 40–50% for cyclicals, 50%+ for special situations.

Illustrative only. Calculator outputs assume constant inputs and ignore taxes, fees, inflation, and market volatility unless stated. For research and educational purposes only — not financial advice.