Dollar-Cost Averaging Calculator
See how investing a fixed amount at different prices lowers your average cost per share below the simple average price.
How it works
Shares = Σ (amount ÷ price each period) · Average cost = total invested ÷ shares bought
Dollar-cost averaging invests the same dollar amount every period regardless of price. Because a fixed amount buys more shares when the price is low and fewer when it is high, your average cost per share lands below the simple average of the prices — a harmonic mean rather than an arithmetic one. It does not guarantee a profit, but it removes the temptation to time the market.
Worked example
Investing $500 for 12 periods at prices of $20, $25, $15 and $22 (cycled) buys about 303.18 shares for $6,000. That is an average cost of $19.79 a share — $0.71 below the $20.50 simple average of the prices, because the fixed $500 scooped up more shares at $15 than at $25.
Frequently asked questions
Why is my average cost below the average price?
A fixed dollar amount buys more shares at low prices and fewer at high prices, which weights your cost toward the cheaper buys. The result is a harmonic mean, always at or below the simple average price.
Does dollar-cost averaging beat investing a lump sum?
Historically a lump sum invested early tends to win because markets rise more often than they fall. Dollar-cost averaging’s real value is discipline and lower regret when prices are volatile.
How are the prices used here?
The prices you enter are cycled across the periods in order, so with four prices and twelve periods each price is used three times. Leave a price at 0 to use fewer points.
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Educational estimate, not investment or tax advice. Returns are never guaranteed and past performance does not predict the future. Confirm with a licensed advisor.