Dollar-Cost Averaging (DCA) Calculator

Dollar-Cost Averaging (DCA) is the practice of investing a fixed dollar amount on a regular schedule, regardless of whether the market is up or down. The result is that you automatically buy more shares when prices are low and fewer when prices are high - your average cost basis ends up below the simple average price.

This calculator uses the standard ordinary-annuity formula: future value = monthly contribution * [((1 + r/12)^(12*years) - 1) / (r/12)]. When the rate is zero, the formula collapses to monthly * 12 * years - simply the total of all your contributions.

Numerical example: $500 a month for 30 years at a 7% nominal annual return lands near $610,000. Of that, you contributed $180,000 ($500 * 12 * 30); compounding produced the other $430,000.

DCA is psychologically powerful. It removes the "should I time this?" decision and ensures you keep buying through bear markets - which is when forward returns are typically highest. The behavioral benefit usually outweighs the marginal mathematical penalty of not lump-summing in a rising market.

The calculator assumes contributions are made at the end of each month. Real brokerage automation often hits a different day of the month or has a small lag, but the difference is rarely material over 10+ year horizons.