DCA Scenario Lab: Dollar-Cost Averaging Simulator
Dollar-cost averaging (DCA) invests a fixed amount at regular intervals rather than all at once. This lab simulates a single deterministic return path so you can see the mechanical effect on average purchase price, total units accumulated, and ending value.
Run a scenario
Results
Based on constant geometric growth at the assumed return rate. Not a forecast of actual investment performance.
Contribution and purchase schedule
| Period | Contributed ($) | Unit price ($) | Units bought | Portfolio value ($) |
|---|
Table shows every contribution period. Unit prices model constant geometric growth at the net annual return.
What this calculator does and does not show
This lab uses a deterministic single-path model: each period's simulated price is the starting price compounded forward at the net annual return (gross return minus fee). There is no randomness, no volatility, and no sequence-of-returns effect.
What it shows
- The mechanical effect of recurring purchases on average cost per unit.
- How total units accumulate across a contribution schedule.
- The relationship between ending value, total contributed, and average cost basis.
- A lump-sum baseline comparison when both an initial cash amount and periodic contributions are entered.
What it does not show
- Volatility drag or the statistical distribution of possible outcomes.
- Sequence-of-returns risk (order of gains and losses).
- Tax effects, dividend reinvestment, or transaction costs beyond the fee rate.
For a statistical comparison of DCA versus investing a lump sum across many simulated market paths, use the DCA vs. Lump Sum Simulator.
Lump-sum comparison caveat
The lump-sum comparison only appears when you enter a non-zero initial cash amount alongside periodic contributions. In that case, the comparison shows what the initial cash alone would be worth if invested in full at the start. It does not compare against the sum of future contributions, because those contributions did not exist at the start of the plan.
Frequently asked questions
What does this DCA Scenario Lab calculate?
It simulates a recurring investment schedule using a constant geometric return path. Outputs include total contributed, ending value, average cost per unit, total units accumulated, and a lump-sum comparison when an initial cash amount is also present.
How is the lump-sum comparison calculated?
The lump-sum comparison compounds only the initial cash amount for the full horizon at the same net annual return. It only appears when both an initial cash amount and periodic contributions are entered, since a periodic-contributions-only scenario has no equivalent lump sum that existed at the start.
Does this tool account for volatility or sequence-of-returns risk?
No. This is a deterministic single-path simulation using constant geometric growth. It shows the mechanical effect of recurring purchases on average cost basis, not a statistical distribution of outcomes. For Monte Carlo path analysis, use the DCA vs. Lump Sum Simulator.
What is average cost per unit and why does it matter?
Average cost per unit is total cash invested divided by total units accumulated. In a rising market with constant contributions, DCA produces a higher average cost than buying all units at the starting price, because each period's price is higher. In a falling-then-rising market, DCA can produce a lower average cost. The ending value is always units times final price, regardless of average cost.