Dollar Cost Averaging Simulator Calculator

Because the calculator assumes one constant, unchanging monthly return rate for the entire holding period. Under a steady positive rate, money invested on day one always has strictly more time to compound than money contributed in month 24 or month 48, so the lump-sum formula FV = P × (1 + r)^n necessarily outpaces the DCA annuity formula whenever the rate is positive. This mirrors real-market research showing lump sum beats DCA roughly two-thirds of the time, for the identical reason: more time in the market usually beats timing entry points.

It back-solves the DCA annuity formula for the monthly contribution amount that would grow to exactly match your lump-sum future value over the same period. If your actual planned monthly contribution is lower than this number, DCA will fall short of the lump-sum outcome in this simulation; if it's higher, DCA would actually pull ahead — useful for sizing how much you'd need to contribute monthly to close the gap.

Lump sum is a single sum compounding for the full n periods, so P × (1 + r)^n captures it completely. DCA is a series of separate monthly deposits, each starting to compound from a different point in time, so the calculator uses the future-value-of-an-annuity formula, PMT × [((1+r)^n − 1) / r], which correctly sums up every contribution's individual compounding period — your first deposit compounds for nearly the full term while your last deposit barely compounds at all.

This simulator only measures the pure math of a perfectly steady, non-volatile return — it can't capture DCA's practical benefits. Spreading contributions over time reduces the risk of investing a large sum right before a downturn, smooths out your average entry price during real volatile markets, and builds a habit of consistent investing for people who don't have a lump sum sitting idle to invest all at once in the first place.