What is the dollar-cost averaging calculator?
In short
Dollar-cost averaging (DCA) means investing a fixed amount at regular intervals regardless of price. Investing $500/month for 20 years at 7% annual return grows to about $260,000 — a $140,000 gain on $120,000 invested. The same $120,000 invested as a lump sum at the start grows to about $465,000, but most people don't have the lump sum available and DCA removes the risk of investing at a market peak.
This DCA calculator simulates month-by-month growth of a regular investment plan and compares it to investing an equivalent lump sum at the start. See total value, total gain, and a year-by-year chart of both strategies.
How to use this calculator
- 1Enter your monthly investment amount.
- 2Set the expected annual return (historical S&P 500 average is ~7–10%).
- 3Choose the number of years to invest.
- 4Optionally enter a lump sum for comparison (defaults to the total you would invest via DCA).
- 5Read the DCA final value, total gain, and see the chart comparing both strategies.
The formula
- V_n
- — Portfolio value at end of month n
- C
- — Monthly contribution amount
- r_m
- — Monthly return rate = (1 + annual rate)^(1/12) − 1
- r
- — Annual expected return (decimal)
Worked example
The scenario
$400/month invested for 30 years at 8% annual return, compared to a $144,000 lump sum at the start.
The result
DCA final value: ~$544,000 on $144,000 invested — a $400,000 gain. Lump sum final value: ~$1,450,000 since the money compounds for the full 30 years. The lump sum wins mathematically, but DCA is the realistic strategy when you're investing from a monthly salary.
Common use cases
- Planning monthly contributions to a brokerage or retirement account
- Understanding how consistent investing grows wealth over time
- Comparing DCA to a one-time windfall investment
- Visualizing how a raise or extra savings accelerates investment growth
Limitations & assumptions
- Assumes a constant annual return — real market returns vary significantly year to year.
- Does not account for taxes on dividends, capital gains, or fund expense ratios.
- Lump-sum comparison assumes the full amount is available at the start — rarely realistic.
- Does not simulate sequence-of-returns risk or market downturns.
Frequently asked questions
Disclaimer: KalkWise calculators are provided for general informational and educational purposes only and do not constitute financial, investment, tax, or legal advice. Results are estimates based on the figures you enter and the assumptions described above. Actual outcomes will vary. Consult a qualified professional before making financial decisions.