Dollar-cost averaging calculator
Dollar-cost averaging means investing a fixed amount on a schedule whatever the market is doing. This calculator projects the result at an assumed return and puts it next to investing the same total on the first day.
Ending value
$86,009.44
- Total invested
- $60,000.00
- Gain
- +$26,009.44
- +43.35%
- Same total invested on day one
- $118,029.08
- At the same steady return
- Averaging in vs all at once
- -$32,019.64
| Year | Invested | Value | Lump sum |
|---|---|---|---|
| 1 | $6,000.00 | $6,225.15 | $64,200.00 |
| 2 | $12,000.00 | $12,886.06 | $68,694.00 |
| 3 | $18,000.00 | $20,013.23 | $73,502.58 |
| 4 | $24,000.00 | $27,639.30 | $78,647.76 |
| 5 | $30,000.00 | $35,799.20 | $84,153.10 |
| 6 | $36,000.00 | $44,530.30 | $90,043.82 |
| 7 | $42,000.00 | $53,872.57 | $96,346.89 |
| 8 | $48,000.00 | $63,868.80 | $103,091.17 |
| 9 | $54,000.00 | $74,564.76 | $110,307.55 |
| 10 | $60,000.00 | $86,009.44 | $118,029.08 |
For education only, not investment advice. Results are estimates based on what you enter, and they leave out anything not shown, such as slippage and most taxes. Check the numbers with your broker or a licensed professional before acting on them.
The formula
- Rate per period
- (1 + annual return) ^ (1 / purchases per year) - 1
- Ending value
- amount x (1 + rate) x ((1 + rate) ^ purchases - 1) / rate
- Lump sum value
- total invested x (1 + annual return) ^ years
Worked example
You invest $500 at the start of every month for 10 years and assume a 7% annual return.
- Total invested: $500 x 120 = $60,000.00
- Ending value: $86,009.44
- The same $60,000.00 invested on day one: $118,029.08
Averaging in grows to $86,009.44. With a steady 7% return, a lump sum would win, ending at $118,029.08, because all of the money is invested for longer. Most people who invest from each paycheck don't have that choice, since they don't hold the lump sum to begin with.
Where averaging helps: your cost per share
A fixed dollar amount buys more shares when prices are low and fewer when they are high. Invest $100 at $10, $5 and $20, and you get 35 shares for $300. Your average cost is $8.57, below the $11.67 average of the three prices. That benefit only appears when prices vary, so a steady-return projection like the one above can't show it.
Does it beat a lump sum?
When markets rise over time, as they historically have more often than not, investing sooner has tended to do better. The calculator shows this as a negative number in the comparison whenever the assumed return is positive. Try a negative return and the result flips.
The case for averaging in is mostly about behavior and regret. It reduces the chance of putting everything in right before a big fall, and it makes investing a habit that doesn't depend on predictions. Whether that's worth the expected cost is a personal call. Check too that per-trade fees don't eat into small purchases.
Frequently asked questions
Is dollar-cost averaging a good strategy?
It's a simple way to invest regularly and to limit the risk of bad timing. It doesn't guarantee a profit or protect against losses in a falling market, and a lump sum has often done better when markets rose.
How often should I invest?
Timing within the month makes little difference over long periods. Weekly, monthly or per paycheck all work, and monthly is the most common because it matches income.
Can I use this for a single stock?
The math works, but averaging into one stock carries that company's risk, and a business can decline for good. The method is most often used with broad funds.