Dollar-Cost Averaging Calculator
Why average cost lands below average price.
Why average cost lands below average price. Enter a regular amount and the price at each purchase.
Comma separated, in order. One per contribution.
Average cost per unit
8.4465
against an average price of 9.1667 — 0.7202 better
A fixed sum buys more units when the price is low and fewer when it is high, so the average COST always comes out at or below the average PRICE. That is a harmonic-versus-arithmetic mean effect and it is genuinely true. It is not the same as beating a lump sum. Investing everything at the start usually wins in a rising market, simply because the money is invested for longer. Dollar-cost averaging reduces the risk of buying badly timed, which is a different benefit and often the more valuable one in practice. With a completely flat price the advantage is exactly zero — the effect comes from volatility, not from the schedule.
How the Dollar-Cost Averaging Calculator works
Enter a regular amount and the price at each purchase. A fixed sum buys more units when prices are low and fewer when high, so the average cost always comes out at or below the average price — a real effect, though a different claim from beating a lump sum.
Also known as: dca calculator · pound cost averaging calculator · average cost per share calculator · lump sum vs dca
Where to go next
The Dollar-Cost Averaging question rarely arrives on its own. These are the ones that usually come with it:
- Investment Return Calculator — CAGR, not the average of the yearly percentages.
- Compound Interest Calculator — See how savings grow with regular contributions.
- Loan & EMI Calculator — Monthly payment, total interest, and a full amortization schedule.
- Mortgage Calculator — Full monthly cost including tax, insurance, and PMI.
Sources
Not financial advice. This calculator is for planning and illustration, not financial advice. Real products carry fees, taxes, and terms it does not model. Confirm figures with your lender or a qualified adviser before committing.
Frequently asked questions
What is dollar-cost averaging?
Investing a fixed amount at regular intervals regardless of price. The fixed sum buys more units when prices fall and fewer when they rise, which pulls the average cost below the average price.
Does it beat investing a lump sum?
Usually not, in a rising market — money invested sooner is invested for longer. What it reduces is the risk of committing everything at a bad moment, which is a different benefit and often the more useful one.
Why is average cost lower than average price?
It is a harmonic-versus-arithmetic mean effect. Buying more units cheaply weights the average towards the low prices. With a completely flat price the advantage is exactly zero, because the effect comes from volatility.
How often should I invest?
Frequency matters far less than consistency. Monthly is common because it matches how people are paid; weekly changes the result very little and adds dealing costs if your platform charges per trade.
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