Dollar-Cost Averaging Simulator.
Model the real-world impact of investing a fixed amount on a regular schedule — see how consistent contributions smooth out market volatility over time.
Before you run the numbers.
Dollar-cost averaging is the practice of investing a fixed dollar amount at regular intervals regardless of market conditions. It is the strategy most investors follow by default through automatic 401(k) contributions — and it turns out to be surprisingly effective, not because it maximizes returns in every scenario, but because it removes the behavioral temptation to time the market.
The mechanics are simple: when prices are high, your fixed contribution buys fewer shares. When prices fall, the same contribution buys more. Over time, this automatic adjustment means your average cost per share is lower than the average price per share over the same period. The mathematical term for this is "harmonic mean" — and its practical consequence is that regular investors who keep contributing through downturns often end up better off than those who tried to buy at the bottom.
This simulator lets you model DCA over a defined investment period. Set your contribution amount, frequency, expected annual return, and time horizon. Compare the outcome to lump-sum investing to see where consistency beats market timing — and where it doesn't. The honest result: for money you're investing from ongoing income, DCA is the right approach. For a windfall, lump-sum investing wins on average. The simulator shows you why.
Run your scenario.
Taught in these books.
Common questions.
Does dollar-cost averaging actually outperform lump-sum investing?
On average, no. Studies show lump-sum investing outperforms DCA roughly two-thirds of the time because markets trend upward more often than they decline. The advantage of DCA is behavioral: it removes the decision of when to invest and reduces the regret of investing a lump sum right before a market decline. For most investors receiving a regular paycheck, DCA is the natural approach — the lump-sum question only applies to windfalls.
What contribution frequency produces the best results?
The difference between weekly, bi-weekly, and monthly DCA is small over long periods. Monthly contributions are the most practical for most investors and the most common default in employer retirement plans. The frequency matters far less than the consistency — stopping contributions during a market downturn eliminates the primary advantage of DCA, which is buying more shares when prices are lower.
Should I stop contributing during a bear market?
No — and this is the core behavioral test of dollar-cost averaging. A bear market is precisely when DCA works best: your fixed contribution buys significantly more shares at lower prices, which amplifies the recovery gain when prices rise. Investors who stop contributing during downturns eliminate the mathematical advantage of the strategy and typically resume after prices have already recovered.