Dollar-Cost Averaging Calculator - Recurring Investment Strategy

What is Dollar-Cost Averaging?

DCA is a strategy of investing a fixed amount at regular intervals regardless of price. When prices are high you buy fewer units; when prices are low you buy more. Over time this tends to lower your average cost per unit compared with buying everything at the worst possible moment. The strategy does not guarantee a profit but removes the pressure of trying to time the market perfectly.

How DCA works: the mechanics

• Pick a fixed amount and interval, such as $200 every month, and automate the deposit.
• Reinvest all proceeds: the full balance compounds at the assumed rate each period.
• Let the schedule run through dips and peaks without skipping contributions.
• Review the plan occasionally (once a year) rather than reacting to daily news.

Worked example: 6 months of buying

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.

Long-term example: what DCA grows to

Investing $500 per month at 7 percent annual return for 20 years produces roughly $260,000 with no starting amount. Total contributions over those 20 years are $120,000 ($500 times 240 months). The remaining $140,000 comes from compounding on top of your contributions.

Extend to 30 years and the balance reaches roughly $570,000 on $180,000 in contributions. At that point compounding contributes more than three times what you deposited directly. The longer the horizon, the more compounding dominates the final balance.

DCA vs lump-sum: when each makes sense

If you have a large amount to invest upfront, putting it all in at once has historically outperformed spreading it over 12 months in roughly two thirds of periods because markets tend to rise over time. A $10,000 lump sum at 7% for 10 years grows to about $19,700. The same $10,000 spread as $833 per month for 12 months only averages about 6 months of market exposure in year one.

DCA is most valuable when you are investing regular income, when you are starting a new plan and want to avoid the regret of a badly timed lump-sum purchase, or when building discipline around consistent investing over many years.

Where DCA falls short

• Opportunity cost in rising markets: a $10,000 lump sum at the start of a 15% year earns $1,500; the same $10,000 spread monthly averages roughly half that market exposure during year one.
• More transaction costs with higher frequency: 52 weekly purchases at $2 each cost $104 per year versus 12 monthly purchases at $2 each costing $24. At $100 per contribution, a $2 fee is 2 percent of each deposit.
• Does not prevent sustained losses: DCA smooths entry prices but does not protect against a multi-year bear market where prices fall throughout the DCA period.
• Psychological friction at scale: a rigid schedule works well when starting, but many investors reduce or pause contributions during downturns, which removes the key benefit of buying at lower prices.
• No help with asset selection: DCA manages timing risk only. Choosing a poor-performing asset class negates the benefit of any contribution schedule, regardless of how disciplined the execution is.

How fees affect the final balance

A 0.2% TER on $200 per month at 7% return over 30 years leaves roughly $244,000. Raising the TER to 0.5% reduces the effective return to 6.5%, leaving roughly $221,000. That 0.3 percentage point difference in fees costs about $23,000 over 30 years.

Transaction costs compound differently: 52 weekly purchases at $1 each cost $52 per year versus $12 for monthly. For a $100 recurring contribution, a $1 transaction cost is 1 percent of each deposit. Use the transaction cost and TER fields to model your actual cost structure before committing to a plan.

Using this calculator

• Enter your Starting amount (can be $0 for a fresh plan).
• Set a Recurring contribution and choose a frequency (daily through annual).
• Pick Years and an Annual return (%) as your planning rate.
• Enable Increase contribution each year to model rising income over time.
• Click Calculate to see the yearly breakdown table and stacked chart.

Inputs explained

• Annual return (%): a planning average, converted to a monthly rate for compounding internally.
• Contribution frequency: Daily=365, Weekly=52, Biweekly=26, Semimonthly=24, Monthly=12, Quarterly=4, Annually=1 (all normalized to monthly internally).
• Transaction cost: deducted from each contribution before it is invested, so higher frequencies carry more total cost over time.
• TER: annual fund fee applied as a monthly reduction to the effective return.
• Currency: display only, no FX forecasting.

Assumptions and limitations

• No taxes or trading frictions beyond transaction cost are modeled. Lower the return input to approximate net results after tax.
• Projections are nominal and do not account for inflation. Subtract 2 to 3 percent from your assumed return to think in real terms.
• Past performance is not indicative of future results. Use outputs as planning illustrations, not guaranteed outcomes.

Supporting calculators

• Crypto DCA backtest: use the Crypto Investment Calculator to apply the same recurring-contribution strategy on historical coin data and see how volatility changes the outcome over different market cycles.
• Savings comparison: use the Savings Calculator to compare a DCA investment plan with a savings-only path using the same contribution habit, so you can judge the risk and return trade-off side by side.
• Portfolio drift check: use the Portfolio Rebalancing Calculator to keep your target asset allocation aligned as recurring DCA positions grow at different rates over time.