Dollar Cost Averaging Calculator
Investing the Same Amount, Rain or Shine
Dollar cost averaging removes the temptation — and the difficulty — of trying to time entries by investing a fixed amount on a fixed schedule regardless of price. The mechanism buys more shares when prices are low and fewer when prices are high, averaging the purchase cost over time. This calculator projects the future value of that regular contribution schedule using the standard future-value-of-an-annuity formula.
The Formula
PMT is the periodic investment amount, r is the periodic rate of return (annual rate divided by the number of periods per year), and n is the total number of contributions (periods per year times years).
Where This Matters
- 401(k) and payroll investing — automatic paycheck contributions to a retirement account are dollar cost averaging in practice, whether or not the investor thinks of it that way.
- Reducing timing risk — for an investor unsure whether current prices are high or low, committing to a fixed schedule avoids the risk of putting a lump sum in right before a downturn.
- Goal-based planning — projecting the future value of a monthly contribution habit at different assumed returns helps size how much needs to be set aside to reach a target.
Worked Example
| Metric | Value |
|---|---|
| Number of contributions | 240 |
| Total invested | $120,000.00 |
| Investment gain | $174,510.21 |
| Future value | $294,510.21 |
Over this 20-year horizon, investment gains outweigh total contributions — a reflection of how much compounding contributes when contributions start early and continue consistently.
How to Use This Calculator
- Enter the amount you plan to invest each period.
- Select your investment frequency — weekly, biweekly, monthly, or quarterly.
- Enter the expected annual return.
- Enter the number of years you'll continue investing.
- Select Calculate to see the number of contributions, total invested, investment gain, and future value.
Related Calculations
Compare a regular-contribution approach against a lump sum using the Future Value Calculator, or check how fund fees eat into these gains with the Expense Ratio Calculator.