Simulate dollar-cost averaging strategy and compare DCA vs lump sum returns. Enter investment amount, frequency, and expected annual return.
FAQ
What is DCA?
DCA (Dollar Cost Averaging) means investing a fixed amount regularly regardless of market conditions. It smooths out purchase prices and reduces timing risk over the long term.
DCA vs lump sum: which is better?
Lump sum tends to outperform in bull markets; DCA reduces risk in volatile/bear markets. DCA is generally more robust for most investors.
What DCA frequency should I choose?
Monthly is most common. More frequent DCA (weekly) provides slightly better averaging but the difference is usually marginal. Consistency matters most.
What expected return should I use?
Stock funds: ~8-12% long-term; bonds: ~4-6%; money market: ~2-3%. Be conservative in your estimates.