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📅 Dollar-Cost Averaging Calculator

See how investing a fixed amount at regular intervals grows over time. Dollar-cost averaging reduces timing risk and builds wealth steadily through market ups and downs.

DCA Formula

FV = P×(1+r)^n + PMT × ((1+r)^n − 1) / r

P = initial investment, r = monthly rate, n = total months, PMT = monthly contribution. Compounding is applied monthly.

How to Use This Calculator

  1. 1
    Enter Initial Investment
    The lump sum you invest at the start. Can be $0 if starting from scratch.
  2. 2
    Set Monthly Contribution
    The fixed amount you invest each month — this is the core of dollar-cost averaging.
  3. 3
    Set Investment Period
    How many years you plan to invest. The longer, the more powerful compounding becomes.
  4. 4
    Review the Growth Table
    See your portfolio value, total invested, and gains year by year.

Real-World Example

Start with $5,000, invest $500/month, 10% annual return, over 20 years.

Total invested = $5,000 + ($500 × 240) = $125,000
Final portfolio value ≈ $380,000+
Total gain ≈ $255,000 from compounding

Frequently Asked Questions

Dollar-cost averaging (DCA) is an investment strategy where you invest a fixed amount at regular intervals regardless of market price. When prices are low you buy more shares; when high, fewer — reducing average cost over time.

Research shows lump sum investing outperforms DCA about 2/3 of the time in rising markets. However, DCA reduces the risk of investing a large amount right before a market downturn, making it better psychologically for most investors.

The S&P 500 has averaged ~10% nominal return historically. After inflation (~3%), the real return is ~7%. Use 7-10% for long-term US stock index fund estimates.

Monthly contributions align with most pay schedules and minimize transaction costs. Some platforms support weekly or bi-weekly automatic investments.

DCA is especially powerful during bear markets because you buy more shares at lower prices. This lowers your average cost basis and amplifies gains when markets recover.

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