Dollar Cost Averaging (DCA) Calculator
Dollar cost averaging (DCA) means investing a fixed amount on a regular schedule regardless of price. This calculator projects how your recurring contributions could grow over time at an assumed annual return.
How it works
Dollar cost averaging spreads your investing across regular intervals, so you buy more shares when prices are low and fewer when prices are high. This calculator assumes a fixed monthly contribution plus an optional initial lump sum.
Growth is modeled with monthly compounding. The initial amount grows as FV = P(1+r)^n, while recurring contributions grow as the future value of an ordinary annuity: PMT × ((1+r)^n − 1) / r, where r is the monthly rate (annual return ÷ 12) and n is the number of months.
Tips
Stay consistent — DCA works best when contributions continue through market ups and downs.
Returns are not guaranteed; markets fluctuate. Use a conservative average return and revisit your plan yearly.
FAQ
Does DCA guarantee profits?
No. DCA reduces the risk of investing everything at a bad time, but all investing carries risk and past performance does not guarantee future returns.
What return rate should I use?
Many people use a long-term average of 6–8% for diversified stock portfolios, but you should choose a figure that reflects your own assumptions and risk tolerance.
Is a lump sum better than DCA?
Historically, lump-sum investing often outperforms DCA on average, but DCA can lower the emotional and timing risk of investing a large amount all at once.