Dollar-Cost Averaging Calculator — Recurring Investment Strategy
Dollar-Cost Averaging Calculator
DCA growth over time
Results summary
20 Years
| Year | Contributions | Growth | Balance |
|---|---|---|---|
| 1 | $4,000 | $165.07 | $4,165.07 |
| 2 | $3,000 | $386.63 | $7,551.70 |
| 3 | $3,000 | $623.70 | $11,175.40 |
| 4 | $3,000 | $877.35 | $15,052.75 |
| 5 | $3,000 | $1,148.77 | $19,201.52 |
| 6 | $3,000 | $1,439.18 | $23,640.70 |
| 7 | $3,000 | $1,749.92 | $28,390.62 |
| 8 | $3,000 | $2,082.42 | $33,473.04 |
| 9 | $3,000 | $2,438.18 | $38,911.22 |
| 10 | $3,000 | $2,818.86 | $44,730.08 |
| 11 | $3,000 | $3,226.18 | $50,956.26 |
| 12 | $3,000 | $3,662.02 | $57,618.28 |
| 13 | $3,000 | $4,128.35 | $64,746.63 |
| 14 | $3,000 | $4,627.34 | $72,373.97 |
| 15 | $3,000 | $5,161.25 | $80,535.22 |
| 16 | $3,000 | $5,732.54 | $89,267.76 |
| 17 | $3,000 | $6,343.82 | $98,611.58 |
| 18 | $3,000 | $6,997.88 | $108,609.46 |
| 19 | $3,000 | $7,697.74 | $119,307.20 |
| 20 | $3,000 | $8,446.58 | $130,753.78 |
About this DCA calculator
Dollar-cost averaging (DCA) means investing a fixed amount on a set schedule, such as monthly, regardless of price levels. By spreading purchases over time, you reduce timing risk and make it easier to stick to a consistent investing routine. This tool models DCA with monthly compounding and a clear year-by-year breakdown.
How it’s computed
We convert the annual return into an effective monthly rate and compound monthly. Recurring contributions are normalized to a monthly pace so results stay comparable. Outputs are summarized per calendar year and shown in a stacked chart: Starting amount, Contributions and Growth.
When to use DCA
What is Dollar-Cost Averaging?
DCA is a simple rules-based approach: invest the same amount at regular intervals, regardless of price. When prices are higher you buy fewer units, and when prices are lower you buy more. Over time this can lower your average cost per unit and helps you stay invested without reacting to short-term moves.
How DCA works (mechanics)
- Pick an interval, such as monthly, and a fixed contribution amount.
- Automate the deposit so it happens regardless of market headlines.
- Reinvest proceeds. Compounding applies to the full balance each month.
- Review the plan occasionally, such as once a year, instead of reacting day to day.
Worked example
Invest $500 at the start of each month for six months while price moves around:
- Jan: price $50, buy 10.00 units (cumulative 10.00)
- Feb: price $55, buy 9.09 units (cum. 19.09)
- Mar: price $48, buy 10.42 units (cum. 29.51)
- Apr: price $52, buy 9.62 units (cum. 39.13)
- May: price $49, buy 10.20 units (cum. 49.33)
- Jun: price $47, buy 10.64 units (cum. 59.97)
Total invested: $3,000. Total units: ≈ 59.97. Average cost: $3,000 / 59.97 ≈ $50.01. You buy more when price dips and less when it rises, smoothing your entry without trying to time the market.
Benefits of DCA
- Reduces timing risk: spreads entry points across volatile markets.
- Behavioral edge: helps avoid emotional decision-making.
- Budget-friendly: start small and scale contributions over time.
- Fits long horizons: useful for multi-year and retirement goals.
Where DCA can underperform
- Strong uptrends: when markets rise quickly, investing earlier as a lump sum can outperform.
- Fees & taxes: frequent purchases may create costs not modeled here.
Using this calculator
- Enter your Starting amount (can be $0).
- Set a Recurring contribution and choose a frequency (weekly through annual).
- Pick Years and an Annual return (%).
- Click Calculate to see the yearly breakdown and stacked chart.
Inputs explained
- Annual return (%): a planning average, converted to a monthly rate for compounding.
- Contribution frequency: Weekly=52, Biweekly=26, Semimonthly=24, Monthly=12, Quarterly=4, Annually=1 (normalized to monthly).
- Currency: display only. No FX forecasting.
Assumptions & limitations
- No taxes or trading frictions are modeled. Lower the return input to approximate net results.
- Projections are nominal and do not account for inflation.
- Past performance is not indicative of future results. Use outputs as planning illustrations.
Want to run other scenarios?
- Classic projection: open the Investment Calculator (Classic).
- Goal mode: try the Investment Calculator (Goal).
- Reality check: use the S&P 500 backtest.