How It Works
Dollar-cost averaging describes investing a fixed amount at regular intervals. This tool models the cash-flow accumulation at a constant assumed return; it does not predict the number of shares purchased or future prices.
The model applies the same contribution at each monthly interval and compounds the accumulated balance at the assumed rate. It therefore illustrates the value of consistent contributions over time.
It does not simulate changing share prices, dividends, taxes, fees, or the number of shares purchased. Those factors can materially change real-world investment results.
Formula
- C — Monthly contribution
- r — Monthly assumed return
- n — Number of months
Example
Example inputs: Invest $300 monthly for 20 years at a hypothetical 7% annual return.
Result: The result shows total contributions and the projected value under the assumption.
Frequently Asked Questions
Does this predict market returns?
No. It only models a constant assumed return to illustrate the accumulation mechanics.
Does dollar-cost averaging guarantee a better return?
No. It is a contribution approach, not a guarantee of performance. Whether it produces a better outcome depends on the asset, market path, contribution timing, and alternative strategy.
Does this calculator include investment fees?
No. Entering a lower assumed return can be used for a rough illustration, but the calculator does not separately model expense ratios, trading costs, or account fees.
This calculator provides estimates for informational purposes only and should not be considered financial, tax, or legal advice.