Dollar cost averaging calculator

What dollar-cost averaging is

Dollar-cost averaging (DCA) is investing a fixed amount on a regular schedule - say $500 every month - no matter what the market is doing. You automatically buy more shares when prices are low and fewer when they are high, which smooths your average purchase price and, just as importantly, removes the urge to guess the right moment. It is how most people invest, one paycheck at a time. This calculator projects where that habit leads.

Worked example

Investing $500 a month for 30 years at a 7% annual return:

• Total invested: $500 × 360 = $180,000
• Final value: about $609,986
• Gain: roughly $429,986

The calculator also shows what the same total would have grown to if invested all at once up front - which is larger, because the money had more time in the market. That illustrates the lump-sum-versus-DCA trade-off.

DCA versus lump sum

If you already have a large sum, history favors investing it all at once - markets rise more often than they fall, so waiting usually costs you. But DCA wins on two fronts that the math misses:

• It matches how income arrives - you invest each paycheck as you earn it.
• It reduces regret and panic - a steady plan is easier to stick with through downturns than a big one-time bet.

The best plan is the one you will actually follow.

How to use the result

• Raise the monthly amount to see how each extra $100 compounds over decades.
• Lower the return to a conservative figure to avoid over-optimistic projections.
• Extend the years to see how powerfully time amplifies a steady habit.

Common mistakes

• Pausing contributions during downturns - exactly when shares are cheapest.
• Treating DCA as a guarantee rather than a discipline.
• Sitting on a large cash lump for years “waiting for a dip” instead of investing.

To compound a starting balance alongside contributions, use the compound interest calculator; to project your financial-independence date, see the FIRE calculator.