What is dollar cost averaging?

Dollar cost averaging (DCA) is investing a fixed amount of money at regular intervals regardless of the stock price. Instead of dropping $10,000 all at once, you invest $1,000 per month for 10 months. This reduces timing risk — you buy more shares when prices are low and fewer when high, averaging your cost over time.

DCA vs lump sum: which is better?

Mathematically, lump sum usually wins in rising markets because you're invested sooner. But DCA reduces regret — you avoid the pain of buying right before a crash. It's also practical: most people don't have a lump sum sitting around. DCA works better for regular income (monthly paychecks) and keeps you disciplined through volatility.

What this calculator shows

This tool compares DCA vs lump sum investing over different time periods and market conditions. Input your monthly contribution, investment period, and expected returns. See how much you'd accumulate with DCA versus investing everything upfront. We show total value, total invested, gains, and which strategy performed better.

Real-world DCA strategies

• 401(k) and IRA contributions: Classic DCA. You invest part of each paycheck automatically.
• Monthly brokerage deposits: Set up automatic transfers to invest the same amount every month.
• DRIP (dividend reinvestment): Dividends automatically buy more shares over time.
• Hybrid approach: Invest a lump sum immediately, then DCA new money as you earn it.