Dollar Cost Average Calculator

Frequently asked questions

Everything you need to know about dollar-cost averaging on TheDesperateTrader.

What is dollar-cost averaging?

Dollar-cost averaging is investing a fixed dollar amount at regular intervals regardless of price. Because the same dollars buy more shares when the price is low and fewer when it is high, your average cost per share tends to land below the simple average of the prices you paid. It removes the pressure of trying to time the market.

How do I calculate my average cost with DCA?

Add up every dollar you invested, then divide by the total shares you accumulated. Since each buy is the same dollar amount, the shares from each buy are the amount divided by that price. This calculator sums it all instantly and compares your average cost to the plain average of the prices so you can see the effect.

Why is my DCA average cost lower than the average price?

Because a fixed dollar amount buys more shares when the price is lower, the cheaper buys carry more weight in your total share count. That pulls your cost-per-share below the simple average of the prices. It is a mathematical feature of fixed-dollar investing, not a guarantee of profit.

Is dollar-cost averaging a good strategy?

DCA is a popular, low-stress way to build a position over time and it removes the need to time entries, which trips up most investors. It does not guarantee a profit and it can underperform a lump sum in a steadily rising market. It is a tool, and this page is educational, not investment advice.

How is this different from averaging down?

Averaging down usually means adding to a losing position to lower your cost. Dollar-cost averaging is a planned schedule of equal-dollar buys regardless of direction. Use our average down calculator for the first case and this one for a regular investing plan.