Dollar-Cost Averaging Simulator
DCA simulator.
Simulate Dollar-Cost Averaging final value vs lump sum investing for the same total contribution, given a market return assumption.
What this tool does
This tool simulates dollar-cost averaging outcomes by calculating portfolio value when investing a fixed amount monthly over a set period, then compares the result with an equivalent lump sum invested at the start. The simulation models growth based on your expected annual return and volatility assumptions, showing how regular contributions accumulate over time. Monthly investment amount, investment duration, and expected return are the primary drivers of final portfolio value. The tool illustrates outcomes under a single return and volatility scenario—it does not model multiple possible market paths or account for taxes, fees, or changes to contribution amounts. Results are for educational illustration only and reflect mathematical projections based on your inputs, not forecasts of actual market performance.
Enter Values
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Formula Used
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Calculations or display — let us know.
Disclaimer
Results are estimates for educational purposes only. They do not constitute financial advice. Consult a qualified professional before making financial decisions.
Dollar-Cost Averaging (DCA) means investing fixed amounts at regular intervals regardless of market price. 500/month into S&P 500 over 30 years = 180k contributed, ~610k final value at 7% average return. Forces buying more shares when prices fall (great), fewer when prices rise. Removes timing decisions and emotion.
Example: 500/month for 20 years at 7% return. Total contributed 120k. Final value 255k. Total gain 135k - 113% of contributions. Equivalent lump sum (120k upfront) at 7% over 20 years: 464k - significantly more. Lump sum wins mathematically because money compounds longer.
DCA vs lump sum: lump sum wins mathematically 2/3 of the time (Vanguard study) because markets rise more than fall. But DCA wins behaviourally - reduces regret risk if market crashes after lump sum. For most people without large lump sums, DCA via salary deduction is the only realistic option. Best of both worlds: lump sum what you have, DCA new income.
A worked example
Try the defaults: monthly investment of 500, expected annual return of 7%, years of 20 years, annual volatility of 15%. The tool returns 260,463.33. You can adjust any input and the result updates as you type — no submit button, no reload. That's the real power here: seeing how sensitive the output is to one or two assumptions.
What moves the number most
The result responds to Monthly Investment, Expected Annual Return %, Years, and Annual Volatility %.
The formula behind this
Future value of monthly annuity at compound interest rate. Everything the calculator does is shown in the formula box below, so you can check the math against your own spreadsheet if you want.
Using this well
What this doesn't capture
Steady-rate math ignores real-world volatility. Actual returns are lumpy; sequence-of-returns risk matters most in drawdown; fees and taxes drag on compound growth; and behaviour changes in drawdowns can reduce outcomes below the projection. The number represents one scenario rather than a forecast.
££500/month at 7% × 20y = 260,463.33 via DCA.
Inputs
This example uses typical values for illustration. Adjust the inputs above to match a specific situation and see how the result changes.
Sources & Methodology
Methodology
The calculator computes the future value of a series of equal monthly investments made over a specified period, assuming a constant annual return. It applies the future value of an ordinary annuity formula, converting the annual return rate to a monthly rate and compounding over the total number of months. Each monthly deposit grows at the stated return rate from the point of contribution until the end of the period. The model assumes returns are steady and predictable, contributions are made at regular monthly intervals, and no withdrawals occur. It does not account for investment fees, taxes, inflation, or actual market volatility and price fluctuations. The volatility input is provided for reference but does not affect the calculated result, which models a smooth-growth scenario rather than variable real-world market conditions.
References
Frequently Asked Questions
DCA vs lump sum - which wins?
Why DCA reduces emotion?
DCA formula assumptions?
Best DCA frequency?
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