Dollar Cost Average Calculator
See what happens when you invest a fixed dollar amount at regular intervals. Enter your periodic investment, number of periods, and price range to calculate your average cost per share, total shares acquired, and overall return.
Dollar cost averaging (DCA) is the practice of investing a fixed amount at regular intervals regardless of the share price. When prices drop, your fixed investment buys more shares. When prices rise, it buys fewer. Over time, this tends to lower your average cost per share compared to the average market price.
For example, investing $500 per month for 12 months with a stock that fluctuates between $80 and $120 might give you an average cost of $95 per share, even if the simple average of all monthly prices is $100. That is the mathematical advantage of DCA -- you automatically buy more shares when they are cheaper.
When DCA Makes Sense
DCA works best when you are investing regularly from income (like 401(k) contributions) or when you want to reduce the emotional risk of investing a large lump sum at a market peak. Studies show that lump-sum investing beats DCA about two-thirds of the time because markets trend upward. But DCA reduces the worst-case scenario and helps investors stay consistent.
The volatility setting in this calculator simulates price fluctuations. Higher volatility actually benefits DCA more because you get more opportunities to buy at lower prices. The key is maintaining discipline and investing the same amount regardless of what the market does.