Dollar Cost Averaging Calculator
Simulate your DCA investment strategy, see how your average cost changes over time, and compare with lump sum investing.
DCA Parameters
Total Invested
$6,000.00
12 monthly investments
Current Value
$6,626.05
55.2171 shares
Average Cost
$108.66
per share
Total Return
+$626.05
+10.43%
DCA vs Lump Sum Comparison
Dollar Cost Averaging
Total Invested:$6,000.00
Shares Acquired:55.2171
Average Cost:$108.66
Final Value:$6,626.05
Return:+10.43%
Lump Sum (All at Start)
Total Invested:$6,000.00
Shares Acquired:60.0000
Purchase Price:$100.00
Final Value:$7,200.00
Return:+20.00%
Note: In a consistently rising market, lump sum investing typically outperforms DCA. However, DCA reduces timing risk and is psychologically easier for most investors.
Purchase History
| Period | Price | Shares | Total Shares | Total Invested | Avg Cost |
|---|---|---|---|---|---|
| 1 | $100.00 | 5.0000 | 5.0000 | $500.00 | $100.00 |
| 2 | $122.13 | 4.0940 | 9.0940 | $1,000.00 | $109.96 |
| 3 | $106.56 | 4.6921 | 13.7861 | $1,500.00 | $108.81 |
| 4 | $84.84 | 5.8936 | 19.6797 | $2,000.00 | $101.63 |
| 5 | $101.28 | 4.9369 | 24.6166 | $2,500.00 | $101.56 |
| 6 | $129.56 | 3.8593 | 28.4759 | $3,000.00 | $105.35 |
| 7 | $120.05 | 4.1649 | 32.6409 | $3,500.00 | $107.23 |
| 8 | $92.89 | 5.3825 | 38.0233 | $4,000.00 | $105.20 |
| 9 | $102.25 | 4.8898 | 42.9132 | $4,500.00 | $104.86 |
| 10 | $135.07 | 3.7018 | 46.6149 | $5,000.00 | $107.26 |
| 11 | $133.55 | 3.7439 | 50.3588 | $5,500.00 | $109.22 |
| 12 | $102.92 | 4.8583 | 55.2171 | $6,000.00 | $108.66 |
What is Dollar Cost Averaging?
Dollar Cost Averaging (DCA) is an investment strategy where you invest a fixed amount of money at regular intervals, regardless of the asset's price. This approach helps reduce the impact of volatility on your overall purchase.
Benefits of DCA
- +Reduces impact of market volatility
- +Removes emotion from investing decisions
- +Easy to automate and maintain
- +Builds discipline and consistency
Considerations
- !May underperform lump sum in rising markets
- !Transaction fees can add up with frequent purchases
- !Requires consistent cash flow for contributions
- !Time in the market often beats timing the market
How DCA Works
1
Set Your Amount
Decide on a fixed amount to invest each period
2
Choose Frequency
Weekly, bi-weekly, monthly, or quarterly
3
Stay Consistent
Invest regardless of market conditions
DCA Example
| Month | Price | Investment | Shares | Avg Cost |
|---|---|---|---|---|
| 1 | $100 | $500 | 5.00 | $100.00 |
| 2 | $80 | $500 | 6.25 | $88.89 |
| 3 | $120 | $500 | 4.17 | $97.40 |
| 4 | $110 | $500 | 4.55 | $100.12 |
Notice how buying more shares when prices are low and fewer when prices are high results in an average cost that smooths out volatility.
DCA Tips
- 1.Automate your investments: Set up automatic transfers to ensure consistency.
- 2.Use commission-free platforms: Minimize costs on frequent small purchases.
- 3.Stay the course: Don't stop investing during market downturns - that's when you buy more shares.
- 4.Consider index funds: Broad market exposure pairs well with DCA.
- 5.Review periodically: Adjust your investment amount as your income grows.