Dollar Cost Averaging Calculator

What Is Dollar-Cost Averaging?

Dollar-cost averaging (DCA) means investing a fixed amount at regular intervals — say, $500 every month — instead of investing a large sum all at once. Because the amount is fixed, you automatically buy more shares when the price is low and fewer when it's high, which smooths out your average purchase price over time and avoids the stress of trying to time a single entry point.

The alternative, lump sum investing, puts all your money to work immediately. Historically, in markets that trend upward over time, lump sum tends to outperform DCA more often than not simply because more money spends more time invested and growing — but DCA carries real behavioral and risk-management benefits that a pure returns comparison doesn't capture, especially in volatile or declining markets.

How to Use This Calculator

Enter how much you'd invest each month, over how many months, along with a starting price and the annual growth rate you expect. The calculator compares two scenarios with the same total money invested: spreading it evenly across every month (DCA) versus investing the entire amount on day one (lump sum), both growing at your entered rate.

How We Calculate It

For DCA, we simulate buying shares every month at that month's price — which grows steadily from your starting price at your entered annual rate, converted to a monthly compounding rate — and add up total shares purchased. For lump sum, we invest the full total (monthly amount × number of months) on day one at the starting price. Both scenarios end at the same final price; the difference comes entirely from when the money went in.

A Few Notes

This calculator assumes smooth, constant price growth, which is a simplification — real markets move up and down unpredictably, and that volatility is actually where DCA's practical advantages show up most (it prevents you from putting a large sum in right before a downturn). Under the constant-growth assumption used here, lump sum will typically come out ahead in any month with positive growth, since all the money is invested from the very start. Use this to understand the mechanics, not as a prediction of which approach will actually perform better for you.