Dollar-Cost Averaging (DCA) Calculator
This dollar-cost averaging (DCA) calculator projects the future value of investing a fixed amount every month, regardless of market price — the strategy that smooths out volatility by buying more shares when prices are low and fewer when prices are high. Enter your numbers to see your projected growth.
The fixed amount you invest every month, regardless of price.
A long-run average for your investments.
How many years you plan to keep investing.
Projected future value
$174,173
How to use this dollar-cost averaging (dca) calculator
- 1Monthly investment: the fixed amount you commit to investing every month, market conditions aside.
- 2Expected annual return: a long-run average for your chosen investments — broad index funds commonly assume 7-10% historically, though future returns aren't guaranteed.
- 3Investment horizon: how many years you plan to keep contributing.
Understanding your results
Projected future value is what your regular investments could grow to. Growth earned shows how much of the final total came from investment returns rather than your own contributions — the longer the horizon, the larger this share typically becomes, since compounding has more time to work.
The formula
Future value = sum of each month's investment, compounded from the month it was made to the endEach monthly contribution is treated as its own investment, compounding from the month it's made until the end of the horizon — earlier contributions have more time to grow than later ones. This is the standard future-value-of-an-annuity formula, the same math behind a SIP or 401(k) contribution stream.
A worked example
$500 invested every month for 15 years at an 8% expected annual return grows to roughly $173,000 — against $90,000 actually invested ($500 × 12 × 15), meaning about $83,000, nearly half the final total, comes from investment growth rather than contributions.
Notes for the UK, US and India
Dollar-cost averaging doesn't guarantee a better outcome than investing a lump sum immediately — historically, lump-sum investing outperforms DCA more often than not, simply because markets rise more years than they fall. DCA's real advantage is behavioral and practical: it fits how most people actually save (from ongoing income) and removes the emotional difficulty of trying to time a single large investment.
Frequently asked questions
Is dollar-cost averaging better than investing a lump sum?+
Historically, lump-sum investing has outperformed DCA more often than not, since markets trend upward over most periods. DCA's real value is practical (investing from regular income) and psychological (avoiding the stress of a single mistimed large investment), not a guaranteed higher return.
Does DCA eliminate investment risk?+
No — it reduces the risk of a single badly-timed lump-sum investment, but your investments are still subject to overall market risk. A sustained market decline still reduces the value of a DCA portfolio.
Should I stop DCA investing during a market downturn?+
Many long-term investors do the opposite — continuing (or even increasing) contributions during a downturn buys more shares at lower prices, a core part of how DCA is meant to work over a full market cycle.
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