Notitia
Dollar cost averaging (DCA) means investing the same amount at regular intervals, whatever the price. It does not try to guess the right moment: it smooths it out.
The average cost (71.7) is below the average price (77.2): a fixed amount buys more units when the price is low. In a steady rise, the lump sum wins because all the money is invested from day one.
Calculated in your browser, nothing is stored. Education, not investment advice.
This calculator compares a budget invested at once with the same budget spread over several months, on typical price paths (crash then recovery, steady rise, sideways market, long decline).
DCA buys more when the price falls, which lowers the average cost.
In a steadily rising market, investing at once earns more because the money works longer: historically that has been the case about two times out of three on major indices. DCA wins when the market falls after the first purchase.
Its real edge is behavioural: it avoids putting everything in just before a crash and makes saving automatic.
It reduces the risk of bad entry timing, not the risk of the asset itself. An asset in lasting decline loses money, scheduled or not.
Monthly in most cases, in step with pay. More often adds almost nothing and can cost fees.
It is widely used in crypto, where volatility makes timing hard. The principle is the same; the asset’s risk stays very high.