Margin of Safety Calculator

How far below intrinsic value a stock trades — your cushion against being wrong.

The core of value investing

Margin of safety is the discount between what a stock is worth and what you pay. Buying with a wide margin protects you when your estimate of value turns out to be too optimistic — the central principle of Graham and Buffett.

The formula

Margin of safety = (intrinsic value − market price) ÷ intrinsic value. A common rule is to demand at least a 25–30% margin before buying.

Frequently asked questions

How big a margin?

For stable businesses 20–30% is common; for uncertain ones demand 50%+. The less confident your valuation, the wider the margin you should require.