DCA Calculator
Calculate dollar-cost averaging returns
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Frequently Asked Questions
What is DCA?
Dollar-Cost Averaging is investing a fixed amount at regular intervals, regardless of price. This reduces the impact of volatility.
Is DCA better than lump sum?
DCA reduces timing risk. Lump sum wins statistically when markets trend up, but DCA provides peace of mind and works better for volatile assets like crypto.
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How dollar-cost averaging performs
What is Dollar-Cost Averaging?
A DCA plan commits the same cash every period. When price is low you buy more units; when high, fewer. The average cost per unit drifts below the simple average price - that gap is the mechanism's entire advantage.
DCA is a risk-management tool, not an optimisation tool. Its real value is behavioural: it converts an unbounded decision ('is now a good time?') into an automatic rule you can follow for years.
How the calculation works
Average cost = total invested / total units acquired, where units each period = contribution / price that period. Break-even price is your average cost; profit = (current price - average cost) x units. Compare against a lump-sum purchase of the same total on day one to see what the schedule cost or saved in that window.
Frequency matters less than consistency: monthly vs weekly changes results by well under 1% over a year, while contribution size and duration dominate.
Worked example
$600 monthly over 6 months at prices 100, 90, 95, 110, 120, 115: units bought = 6.00 + 6.67 + 6.32 + 5.45 + 5.00 + 5.22 = 34.66, total invested $3,600, average cost $103.87 - below the period's average price of $105.00 and well below the final price of $115. At $115 the position is worth $3,986, a 10.7% gain. A lump sum on day one would have ended at $4,140 (15%) - the usual trade-off: smoother entry, slightly lower peak return in rising markets.
When to use it (and when not to)
Use DCA for volatile assets with a multi-year horizon, for deploying a large sum into uncertainty, and for money you cannot afford to see drop 30% in a month. Favour lump sum when you have a long horizon, stable markets, and the discipline not to react to drawdowns.
Accuracy, limits, and what it cannot tell you
In markets that rise steadily, DCA underperforms lump sum because cash sitting on the sidelines misses gains. The comparison flips in flat or falling markets.
Fees and spread per transaction add up on high-frequency schedules - 12 purchases a year at a 0.5% spread costs more than 4. Taxes on disposals apply at every sale in a taxable account.
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