Dollar Cost Averaging Calculator
This calculator projects the future value of a recurring-investment plan (dollar-cost averaging) and provides a lump-sum comparison under the same assumptions. It factors in periodic fees and converts nominal projections into inflation-adjusted (real) terms for purchasing-power perspective.
Use the tool to explore sensitivities: change contribution frequency, assumed long-term return, fees, and inflation. Results are illustrative projections — not guarantees — and should be combined with professional advice for financial decisions.
Projects future value assuming recurring fixed contributions at regular intervals and compound returns. Fees are applied as a simple periodic deduction; inflation-adjusted results are provided for purchasing-power context.
Inputs
Results
Projected nominal future value
$16,643.87
Inflation-adjusted future value
$13,653.77
Total contributed
$12,000.00
Approx. annualized return
332.54%
| Output | Value | Unit |
|---|---|---|
| Projected nominal future value | $16,643.87 | USD |
| Inflation-adjusted future value | $13,653.77 | USD |
| Total contributed | $12,000.00 | USD |
| Approx. annualized return | 332.54% | % |
Visualization
Methodology
Projections use discrete periodic compounding. Annual nominal return is converted to a per-period rate so contributions made at regular intervals can be accumulated.
Fees are approximated as an even annual percentage (expense ratio) applied as a proportional reduction per period. Inflation adjustment divides the nominal future value by the cumulative inflation factor over the full horizon.
This tool provides illustrative, deterministic outputs from user inputs. It does not perform stochastic simulations or tax calculations. Users should validate assumptions and consider backtesting against historical series where available.
Worked examples
Example: $100 monthly for 20 years, 7% annual return, 0.5% fees, 2% inflation — compare projected nominal and real values to a lump-sum of the same total invested at the start.
Use a shorter horizon and lower return to see the effect of fees and inflation on purchasing power; increase contribution frequency to observe compounding cadence effects.
Further resources
Expert Q&A
Does this calculator guarantee investment performance?
No. Outputs are deterministic projections based on user assumptions. Real market returns vary and can be negative. This tool does not predict future returns.
How are fees and inflation handled?
Fees are approximated as an annual percentage converted to a per-period deduction. Inflation adjustments divide nominal future value by the cumulative inflation factor over the full horizon to estimate real purchasing power.
Should I always prefer DCA over lump-sum investing?
Not necessarily. Historically, lump-sum investing often outperforms DCA when markets generally trend upward, but DCA can reduce short-term timing risk and help with behavioral consistency. Use this comparison alongside risk tolerance and time horizon.
What are the limitations of these formulas?
The model assumes constant periodic returns and fees, contributions of fixed size and timing, no taxes, and no transaction frictions. It does not model volatility drag, sequence-of-returns risk in full stochastic detail, or tax-optimized withdrawal strategies.
How can I improve accuracy?
Use historical total-return series for backtesting, run Monte Carlo scenarios for probabilistic outcomes, incorporate tax rules where relevant, and verify fee assumptions from fund documents.
Sources & citations
- NIST Risk Management Framework (general computational accuracy & model documentation practices) — https://www.nist.gov
- ISO 31000 Risk management — Guidelines — https://www.iso.org/iso-31000-risk-management.html
- IEEE guidelines on numerical reproducibility and documentation — https://www.ieee.org
- Occupational Safety and Health Administration (documentation and process control standards reference) — https://www.osha.gov