EN
PT
ES
Dollar-Cost Averaging Calculator
Project the future value of regular contributions — see how a steady investing habit compounds over time.
Year-by-year projection
| Year | Contributed | Growth | Balance |
|---|
What is dollar-cost averaging?
Dollar-cost averaging (DCA) is the practice of investing a fixed amount on a regular schedule — every paycheck, every month, every quarter — regardless of what the market is doing that day. The point is not to maximize returns; it's to remove timing risk and the emotional swings that cause investors to buy high and sell low. When prices are high, your fixed contribution buys fewer shares. When prices fall, the same amount buys more shares. Over a long horizon, the average cost per share trends toward the long-run average rather than getting anchored to whatever price you paid in a single lucky or unlucky lump-sum purchase. DCA is also a forcing function: by making contributions automatic, you sidestep the entire question of whether "now" is a good time to buy. Most retirement contributions, automated brokerage deposits, and 401(k) plans are DCA by design. This calculator projects what that habit grows into over time, given an expected return. It's not a forecast — markets are noisy and the actual sequence of returns matters — but it shows the order of magnitude. The takeaway is almost always the same: the longer you stick with it, the more of the final balance comes from compounding rather than from your own contributions.
How to use it
- Enter your contribution — Use the actual amount you'll add each period. Don't aspirationally inflate it.
- Pick a frequency — Match how you really invest — every paycheck, every month, etc. The math compounds at that frequency.
- Pick an expected return — Common defaults: 4-5% for a conservative bond-heavy portfolio, 6-8% for a diversified equity portfolio, before inflation. For after-inflation results, subtract 2-3 percentage points.
- Set your time horizon — Years until you'd start drawing the money. Longer horizons let compounding dominate the contributions in the final balance.
The math
Future value of a series of regular contributions, plus the future value of the starting lump.
FV = PMT × [ ((1+r)n − 1) / r ] + PV × (1+r)n
PMT is the per-period contribution, r is the per-period rate (annual rate ÷ periods per year), n is the total number of periods, PV is the optional starting amount, and FV is the projected future value.
Why time matters more than the contribution
At a 7% annual return, $500/month for 10 years grows to about $87,000 — only $27,000 of which is interest. The same $500/month for 30 years grows to about $610,000, with over $430,000 from interest. The contributions were just three times larger; the final balance was seven times larger. That's compounding. The lesson is to start as early as possible, even if the contribution is small, and keep going.