INVESTING CHANNEL
Dollar Cost Averaging Calculator
Model systematic monthly purchases to see how DCA builds consistent long-term wealth.
Calculator Variables
Calculation Overview
Visualize the power of systematic investing. Compare DCA stock purchases with lump-sum investing over long periods.
Mathematical Model & Formula
FV = PMT * [((1 + r/12)^(12t) - 1) / (r/12)]
Computes the standard ordinary annuity formula representing steady periodic contributions.
Variables Defined:
- FV: Future portfolio value
- PMT: Systematic monthly contribution
Worked Example Scenario
Scenario: Investing $300/month at 8% for 5 years.
- r = 0.08 / 12 = 0.006667
- Periods = 60
- Calculate annuity growth: $300 * [(1.006667^60 - 1) / 0.006667] ≈ $22,143
Result: Ending balance is $22,143.
Frequently Asked Questions
What is DCA?
Dollar-Cost Averaging is the practice of investing a fixed dollar amount on a regular basis, regardless of stock prices, to reduce volatility impact.