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Calculate your dollar-cost averaging (DCA) investment returns. Plan your investment strategy and see potential returns over time.
Dollar-Cost Averaging Calculator
Dollar-cost averaging (DCA) is an investment strategy where you invest a fixed amount regularly, regardless of the asset's price. This calculator helps you estimate your potential returns.
Amount you invest each period (e.g., monthly)
Historical average: S&P 500 ~10%, conservative estimate ~7%
Only needed if you want to calculate number of shares
Investment Summary
Additional Details
Note: This calculator provides estimates only. Past performance does not guarantee future results. Always consult with a financial advisor before making investment decisions.
Investment Growth Over Time
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 investments by spreading purchases over time.
Benefits of DCA:
- Reduces timing risk: You don't need to time the market perfectly
- Emotional discipline: Removes emotion from investment decisions
- Lower average cost: You buy more shares when prices are low and fewer when prices are high
- Consistent investing: Builds a habit of regular investing
How to Use This Calculator:
- Enter the amount you plan to invest each period
- Select how often you'll invest (monthly, weekly, etc.)
- Choose your investment duration
- Enter your expected annual return (historical average is ~7-10%)
- Optionally enter a starting price if you want share calculations
Frequently Asked Questions
What is dollar-cost averaging?
Dollar-cost averaging (DCA) is an investment strategy where you invest a fixed amount of money at regular intervals (weekly, monthly, etc.), regardless of the asset's price. This helps reduce the impact of market volatility and removes the need to time the market perfectly.
Is dollar-cost averaging better than lump sum investing?
Studies show that lump sum investing typically outperforms DCA about 66% of the time because markets tend to go up over time. However, DCA reduces risk and emotional stress, making it ideal for investors who want to build wealth gradually or don't have a large sum to invest upfront.
How accurate is this DCA calculator?
This calculator uses standard compound interest formulas to project potential returns based on your inputs. However, actual investment returns will vary based on market performance. Past performance doesn't guarantee future results. Use this as a planning tool, not a guarantee.
What's a realistic expected return rate?
Historical data shows the S&P 500 has averaged about 10% annual returns over the long term. However, conservative estimates use 7-8% to account for inflation and market variability. Your actual returns will depend on your specific investments and market conditions.
Should I use DCA for all my investments?
DCA works best for regular income earners who want to invest consistently over time. It's ideal for retirement accounts (401k, IRA) and building long-term wealth. For large windfalls or lump sums, consult a financial advisor to determine the best strategy for your situation.