Purchase Frequency
Price Assumptions
The average annual return models price growth between purchases. The S&P 500 has returned approximately 10% annually over the long term.
DCA Results
Enter your DCA plan and click calculate.
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What This Calculator Does
This dollar cost averaging (DCA) calculator shows the results of investing a fixed dollar amount at regular intervals, regardless of share price. It calculates total shares accumulated, average cost basis, and unrealized gain or loss. DCA is one of the most widely recommended investment strategies because it reduces the risk of investing a large sum at a market peak and takes advantage of market volatility by automatically buying more shares when prices are low and fewer when prices are high.
The Formula
Each purchase divides the fixed investment amount by the current share price to determine shares bought. Over time, more shares are purchased during dips and fewer during peaks, resulting in an average cost basis that is typically lower than the arithmetic average of all purchase prices. This cost-basis advantage is the core benefit of DCA.
Step-by-Step Example
Set investment plan
$500 per month for 24 months into an S&P 500 index fund. Starting price: $150/share.
Model price changes
Assuming 10% average annual return with natural price fluctuations over the period.
Calculate results
24 purchases totaling $12,000 invested. Total shares: ~73.5. Average cost basis: ~$163.27.
Assess unrealized gain
Current price: $185. Portfolio value: ~$13,598. Unrealized gain: ~$1,598 (+13.3%).
Real-World Use Cases
401(k) and IRA Contributions
Model the effect of regular paycheck contributions to retirement accounts, which is naturally a DCA strategy.
Lump Sum vs. DCA Comparison
Compare the outcome of investing $12,000 all at once versus $500/month to understand the tradeoffs between the two approaches.
Savings Plan Projections
Project future portfolio value based on regular investment amounts to set realistic savings goals.
Common Mistakes to Avoid
Stopping contributions during market downturns. DCA works best when you continue investing through dips, buying more shares at lower prices.
Using DCA as an excuse to avoid investing a windfall. Research shows that lump-sum investing outperforms DCA approximately 66% of the time because markets tend to go up over time.
Not accounting for dividends and reinvestment. Total return includes both price appreciation and dividends, which can be reinvested to buy additional shares.
Ignoring transaction costs. If your broker charges per-trade fees, frequent small purchases can erode returns. Most major brokers now offer commission-free trading.
Frequently Asked Questions
Accuracy and Disclaimer
DCA projections use simplified assumptions about price growth and do not account for dividends, fees, taxes, or real-world price volatility. Past market returns do not guarantee future results. This calculator is for educational and planning purposes only.
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