Dollar Cost Averaging
Estimate what investing a fixed amount every month could grow to over a set number of months.
Dollar Cost Averaging
Investing $200 a month for 24 months at an assumed 25% annual return would grow to about $6,147. You would have put in $4,800, for a profit of about $1,347 and an ROI of about 28.1%. That return is an assumption, not a forecast.
How to use this dollar cost averaging calculator
- Enter the monthly amount you plan to invest.
- Enter the number of months.
- Enter the annual return you want to test.
- Read the portfolio value, total invested, profit and ROI.
The math behind the result
Value = Monthly amount × [(1 + r)n − 1] ÷ r, where r is the monthly rate (annual rate ÷ 12) and n is the number of months. Invested = monthly amount × months.
Worked example
$200 a month, 24 months, 25% a year assumed:
- Total invested: $4,800
- Value: $6,147
- Profit: $1,347, ROI 28.1%
Try a lower return such as 7% to see a more conservative result for a broad stock fund.
What dollar-cost averaging is
You invest a fixed amount on a regular schedule regardless of price. You buy more shares when prices are low and fewer when high, which smooths your average cost and removes the pressure of timing the market.
DCA vs lump sum
Historically, investing a lump sum right away has beaten spreading it out more often than not, because markets rise more often than they fall. DCA mainly reduces regret and risk if prices drop right after you invest, and it matches how most people actually earn and save.
Use realistic returns
The default return is deliberately high for a volatile asset. For diversified stock funds, tests at 5% to 8% are more typical. Returns are never guaranteed, and the calculator uses a constant rate while real prices fluctuate.
Key terms
- Dollar-cost averaging
- Investing a fixed amount at regular intervals.
- Average cost
- Total spent divided by total units bought.
- ROI
- Profit as a percentage of the amount invested.
Frequently asked questions
What is dollar-cost averaging?
It is investing the same amount on a regular schedule, such as monthly, regardless of the price.
Is DCA better than lump-sum investing?
A lump sum has usually done better historically, but DCA lowers the risk of investing everything just before a drop and suits steady monthly savers.
Does DCA guarantee profit?
No. It does not protect against losses if prices keep falling.
What return should I enter?
Use a conservative assumption. Treat very high returns as a best case, not a plan.
Sources and further reading
Related calculators
Related guides
Figures in the examples are illustrative and use the inputs shown. Market rates and program rules change; confirm current terms with your lender or the linked official sources before making a decision.
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Compound interest is the most powerful force in investing -- starting early and staying consistent consistently outperforms timing the market. Understanding investment return metrics like CAGR, IRR, and Sharpe ratio helps you evaluate opportunities objectively. Use our free calculators to model different scenarios before committing capital.
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Disclaimer: This calculator provides estimates for educational purposes only and is not financial, tax, or legal advice. Results depend on the figures you enter and on simplified assumptions; actual rates, taxes, and outcomes will differ. Consult a qualified professional before making financial decisions.