Dollar-Cost Averaging Calculator
See the future value of investing a fixed amount every month at your expected return rate — year by year, with a growth chart.
How the DCA calculator works
The simulation runs month by month for the full horizon. At the start of each month it adds your monthly contribution to the portfolio, then applies one month of return — (annual return ÷ 12) × portfolio — and compounds the result into next month's starting balance.
"Total invested" is the sum of your contributions over the period. "Investment gains" is final value − total invested — what compounding earned you on top of what you put in.
Effective annual return is the money-weighted compound annual growth rate. It will be lower than your input rate because most contributions don't earn for the full horizon — only the first month's does.
Frequently asked questions
- What is dollar-cost averaging?
- Dollar-cost averaging (DCA) is the strategy of investing a fixed dollar amount at regular intervals — usually monthly — regardless of asset price. Over time, you automatically buy more shares when prices are low and fewer when prices are high, which lowers your average cost basis compared to investing the same total amount in a lump sum at random points.
- Is DCA better than lump-sum investing?
- Historically, lump-sum has outperformed DCA in about two-thirds of rolling periods because markets trend up. But DCA wins on a different axis: it eliminates the "when do I buy?" decision, smooths emotional reactions to volatility, and matches how most people actually receive income (monthly paychecks). For most retail investors, DCA from each paycheck is the more practical choice.
- What return rate should I assume?
- S&P 500 historical nominal return is ~10%/year over very long periods. Real (inflation-adjusted) return is ~7%/year. Bond portfolios return 3–5% nominal. Use whichever matches your portfolio — and always remember "past performance does not guarantee future results."
- Does this calculator account for market timing or volatility?
- No. The calculator assumes a smooth annual return — it doesn't simulate market drops, recoveries, or sequence-of-returns risk. In reality, your DCA path will be bumpier than the chart. The final value depends on the actual sequence of returns, not just the average.
- What's the difference from the Compound Interest calculator?
- Math is identical. Framing differs: this one assumes no starting deposit (pure DCA from zero), and the language is about regular investing rather than interest accrual. If you have an initial lump sum plus ongoing contributions, use the Compound Interest calculator. If you're starting from scratch with paycheck deductions, this one fits better.