Dollar Cost Averaging Calculator

Dollar-cost averaging buys a fixed amount at fixed intervals regardless of price. This models what that produces against a single lump-sum purchase.

What dollar-cost averaging does

Dollar-cost averaging means investing a fixed amount at fixed intervals, regardless of price. Because the amount is fixed rather than the quantity, you automatically buy more units when the price is low and fewer when it is high.

That average is a harmonic mean rather than an arithmetic one, and it is always at or below the arithmetic average of the prices you bought at. This is a genuine mathematical property of the method, not marketing.

This calculator asks for your realistic average entry price rather than simulating a price path, because inventing a price series would create a false impression of precision. Use the actual average if you are reviewing past purchases, or a considered estimate if you are planning.

Averaging versus lump sum

The honest comparison is uncomfortable for both camps.

Mathematically, lump sum usually wins. Studies across long equity histories find that investing everything immediately beats spreading it out roughly two thirds of the time, simply because markets rise more often than they fall, and money invested earlier is exposed to that rise for longer.

Behaviourally, averaging usually wins. It requires no timing decision, removes the regret of committing everything just before a fall, and is far easier to sustain through a drawdown. In an asset that routinely falls 70 %, a method you can actually keep following beats one that is slightly better on paper and that you abandon.

The relevant question is not which has the higher expected return but which you will actually execute. An automated weekly purchase that continues through a bear market beats a perfectly reasoned lump-sum plan that never gets placed.

Doing it properly

• Automate it. A recurring order removes the monthly decision, which is the point. Deciding each month whether “now is a good time” recreates the problem averaging was meant to solve.
• Watch the fees. Frequent small purchases can be expensive. A fixed fee of €2 on a €50 weekly buy is 4 %, which will cost you more than any timing benefit. Monthly purchases are often the better compromise.
• Write down the exit rule at the start. Averaging in is a plan for buying; it says nothing about when to stop or sell, and that decision is where most of the emotion lives.
• Keep tax records. Every purchase is a separate cost-basis lot. Dozens of small buys over years become a serious record-keeping exercise if you do not export as you go.
• It is not a guarantee. Averaging into an asset that goes to zero produces a loss just as surely as a lump sum. It manages timing risk, not the risk that the thing is worthless.