Dollar-Cost Averaging Calculator
See how investing a fixed amount regularly beats lump-sum and builds wealth over time.
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Frequently Asked Questions
What is dollar-cost averaging?
Dollar-cost averaging (DCA) means investing a fixed dollar amount at regular intervals regardless of market price. When prices are low you buy more shares; when prices are high you buy fewer. This removes the stress of trying to time the market and results in a lower average cost per share over time compared to a single purchase at a random price.
Is DCA better than lump sum investing?
Academic research (including Vanguard studies) shows lump-sum investing outperforms DCA about two-thirds of the time in rising markets, because more money is invested earlier. However DCA wins in falling markets and dramatically reduces the risk of investing everything at a peak. For regular income investors, DCA via payroll deductions is the natural and practical approach.
How do I start dollar-cost averaging?
The easiest way is to automate contributions to your 401k (every paycheck is DCA), set up automatic monthly transfers to a brokerage index fund, or use apps like Fidelity, Vanguard, Schwab or Robinhood with automatic investing features. Target low-cost index funds (expense ratio under 0.10%) for best long-term results.