Free Dollar-Cost Averaging Calculator
Calculate the outcome of investing a fixed amount at regular intervals instead of a lump sum.
Future Value
$91,473
Future Value vs Monthly Investment
Dollar-Cost Averaging (DCA)
DCA involves investing a fixed amount at regular intervals, regardless of market conditions.
How DCA Works
Future Value Formula
FV = PMT x [(1+r)^n - 1] / r
Where PMT is the monthly investment, r is the monthly return, and n is total months.
DCA vs Lump Sum
Historically, lump-sum investing outperforms DCA about 2/3 of the time. However, DCA reduces the emotional risk of investing at a peak and is the natural approach for income earners.
Example Calculation
$500/month for 10 years at 8% annual return.
- 01Monthly return = 8% / 12 = 0.667%
- 02Total months = 120
- 03Total invested = $500 x 120 = $60,000
- 04Future value = $500 x [(1.00667)^120 - 1] / 0.00667 = $91,473
- 05Investment gains = $91,473 - $60,000 = $31,473
Frequently Asked Questions
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