Dollar-Cost Averaging Calculator

Not necessarily, in pure expected-return terms -- because markets trend upward over most long periods, money invested earlier (lump sum) has historically had more time to compound than the same money invested gradually (DCA), which is exactly what this calculator's Lump-Sum Comparison figure illustrates. DCA's real advantage is behavioral and risk-related: it doesn't require having the full amount available at once, and it spreads out the risk of investing everything right before a downturn.

Because investment gains compound on themselves over time, while contributions only add up linearly -- doubling your monthly contribution doubles what you put in, but extending the time period lets each dollar (both early and late contributions) keep earning returns on its own prior returns. A longer runway gives compounding more cycles to work with, which is why Time Period tends to move the final portfolio value more than an equivalent percentage change in Monthly Investment.

It's the single most influential -- and most uncertain -- number in this calculator, since it compounds every month for the entire time period. A seemingly small change, like assuming 6% instead of 8% annual return, can shift the final portfolio value by tens of thousands of dollars over a multi-decade horizon, which is why it's worth testing a conservative, moderate, and optimistic return assumption rather than trusting a single number.

Not on its own, when there's no separate initial lump sum in the mix -- scaling every monthly contribution up or down by the same proportion scales both the final portfolio value and the total contributed by that same proportion, leaving the ratio between gains and contributions (the ROI percentage) unchanged. It's the expected return rate and the time period, not the size of each monthly deposit, that actually move the ROI percentage.