DCA Calculator

How the DCA position works

Dollar-cost averaging trades timing for discipline: the same dollar amount buys fewer shares at high prices and more at low prices, pulling your average cost toward the middle of the price path. Three numbers describe the position:

Total invested = monthly amount × periods
Shares = total invested ÷ average purchase price
Value = shares × current price

Your average purchase price is what your broker shows as the cost basis — total invested divided by total shares. The return on cost compares today's value to cash actually deployed, ignoring cash that was never invested.

Worked example

$200 per month for 24 months invests $4,800. If your fills averaged $38.50, you accumulated about 124.7 shares. At $52 today the position is worth $6,483 — a gain of $1,683, or +35.1% on cost. Notice what DCA did: every month the price dipped below $38.50, the fixed $200 bought extra shares, lowering the basis; a single lump sum at month one would have carried a basis equal to that month's price, for better or worse.

DCA vs lump sum

Historically, lump-sum investing wins about two-thirds of the time purely because markets drift upward while DCA holds cash back. But DCA wins on behaviour: automating contributions is the strategy people actually stick with through drawdowns. The best DCA plan is the one whose monthly amount you never pause.

Frequently asked questions

1. What is dollar-cost averaging (DCA)?

Investing a fixed amount at regular intervals regardless of price. Fixed dollars buy more shares when prices fall and fewer when they rise, smoothing your entry price over time.

2. How do I find my average purchase price?

Divide total money invested by total shares acquired — brokers show this as your cost basis or average cost. This calculator computes it from your per-period amount and the average fill price.

3. Is DCA better than investing a lump sum?

On raw historical returns, lump sum wins roughly two-thirds of the time. DCA's advantage is behavioural: automated fixed contributions keep you investing through volatility instead of waiting for a 'good' moment that never feels right.

4. Does DCA work in a falling market?

Yes — mechanically it works best there, since fixed dollars accumulate extra shares at depressed prices, positioning you harder for the recovery. The hard part is psychological, not mathematical.