Dollar-Cost Averaging Calculator

DCA means investing a fixed dollar amount at regular intervals (e.g., $500/month) regardless of price. When prices are high, you buy fewer shares. When prices are low, you buy more. Over time, this averages out your cost per share and removes the pressure of timing the market.

Studies show lump sum investing outperforms DCA about 2/3 of the time in rising markets — because money is invested sooner and earns more returns. However, DCA is psychologically easier, reduces timing risk, and is often the only practical option (you invest as you earn). Both beat not investing.

Historical S&P 500 return: ~10% nominal, ~7% inflation-adjusted per year. Some years are down 30%, some up 30%. DCA into index funds over long periods has historically produced strong results because you buy more shares during downturns. Always use diversified index funds for DCA.

Monthly aligns with most paychecks and is most practical. Bi-weekly or weekly DCA statistically produces slightly lower average cost but the difference is small. Automate it — set up automatic investment on payday so the money is invested before you can spend it.

Broad index funds work best for DCA: S&P 500 index (like VFIAX or VOO), total market index (like VTI), international index (like VXUS). Individual stocks add company-specific risk. Target-date funds simplify it further. Low expense ratios (under 0.1%) matter more over long time horizons.