Dollar Cost Averaging (DCA) Calculator (USA)
Estimate investment growth from monthly contributions, optional annual increases, and inflation-adjusted results.
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Dollar Cost Averaging (DCA) Calculator
Dollar Cost Averaging (DCA) is an investment strategy where you invest a fixed amount of money at regular intervals, regardless of market conditions. This DCA Calculator helps you estimate the final portfolio value, total invested amount, returns, and CAGR based on your monthly investment, expected return, and time horizon.
This calculator is ideal for planning long-term ETF investing, monthly investing, and retirement-oriented portfolios.
How does the Dollar Cost Averaging calculator work?
The DCA calculator simulates regular investments made over time. Each contribution is invested at a different point, so every amount compounds for a different duration.
The calculator:
- Simulates monthly investments
- Applies compounding based on the expected annual return
- Continues growth after contributions stop (if you stay invested)
- Optionally adjusts results for inflation to show real returns
This method reduces the impact of market timing and smooths investment risk over time.
What is Dollar Cost Averaging?
Dollar Cost Averaging is commonly used by investors who:
- Invest monthly into ETFs or index funds
- Contribute regularly to brokerage or retirement accounts
- Prefer disciplined investing over market timing
Instead of investing a lump sum at once, DCA spreads investments across market cycles.
DCA vs Lump Sum Investing
| Dollar Cost Averaging | Lump Sum Investing |
|---|---|
| Invests gradually over time | Invests all money at once |
| Reduces timing risk | Sensitive to market entry |
| Suitable for monthly income | Requires large upfront capital |
| Encourages consistency | Requires market confidence |
DCA is often preferred for long-term investors who want predictable investing behavior.
Nominal vs Inflation-Adjusted Returns
Nominal returns show the future value of your investment in dollar terms.
Inflation-adjusted returns show the real purchasing power of your portfolio.
When inflation adjustment is enabled, the calculator uses the selected inflation rate to estimate real returns.
When should you use a DCA calculator?
A Dollar Cost Averaging calculator is useful if you want to:
- Estimate returns from monthly investing
- Plan long-term ETF or index fund investments
- Compare staying invested vs stopping contributions
- Understand the impact of inflation on investment growth
Frequently Asked Questions (FAQs)
How does a dollar cost averaging calculator work?▼
A dollar cost averaging calculator simulates regular monthly investments and compounds each contribution over time. Earlier investments grow longer, while later investments grow for shorter periods, producing a final portfolio estimate.
Is dollar cost averaging good for long-term investing?▼
Dollar cost averaging is commonly used for long-term investing because it reduces market timing risk and encourages consistent monthly investing.
Can this DCA calculator show inflation-adjusted returns?▼
Yes. When inflation adjustment is enabled, the calculator estimates real returns by adjusting portfolio growth using the selected inflation rate.
Is dollar cost averaging better than lump sum investing?▼
Dollar cost averaging reduces timing risk by spreading investments over time, while lump sum investing depends on market entry timing. The better option depends on market conditions and risk tolerance.
Can I use dollar cost averaging for ETF investing?▼
Yes. Dollar cost averaging is widely used for monthly ETF and index fund investing, especially for retirement and long-term portfolios.
Disclaimer
This calculator provides estimates for educational purposes only. It does not constitute investment advice.