Dollar-cost averaging (DCA) means investing a fixed amount at a regular interval regardless of prices. This calculator projects a monthly plan: total invested, projected value and the growth on top.
Investing on a schedule removes the temptation to time the market and averages your purchase price across ups and downs. The projection compounds your contributions monthly at the annual rate you choose.
A constant return is a simplification — real markets are volatile, and the order of good and bad years matters less for steady contributors, which is exactly why DCA is popular.
On the historical record, investing a lump sum immediately beats spreading it out roughly two-thirds of the time, simply because markets rise more often than they fall and time in the market is what compounds. That is not an argument against dollar-cost averaging, which for most people is not a choice between strategies at all but the shape their income already takes. It is an argument against treating deliberate phasing-in of money already held as an optimisation: it is a way of making a decision tolerable, and worth doing for that reason rather than for the return.
Frequently asked questions
What is dollar-cost averaging?
Investing a fixed amount on a fixed schedule regardless of price. You automatically buy more shares when prices are low and fewer when they are high, averaging your entry price.
Is DCA better than investing a lump sum?
Historically a lump sum has beaten DCA roughly two times out of three, because markets rise more often than they fall. DCA still wins on discipline and regret — and salary income arrives monthly anyway.
What return should I assume for a monthly plan?
Broad, diversified stock portfolios have historically returned about 5–8% per year nominal over long horizons. Use a lower figure to be conservative, and remember fund fees subtract directly from it.