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Enter investment parameters and click 'Calculate'
What is Dollar-Cost Averaging (DCA)?
Dollar-Cost Averaging is a time-tested investment strategy used by millions of successful investors worldwide. By investing a fixed amount at regular intervals—monthly, for example—you automatically buy more shares when prices are low and fewer when prices are high. This powerful approach:
- Reduces market timing risk by spreading purchases over time
- Builds discipline and removes emotion from investing
- Makes investing accessible by requiring only modest regular contributions
- Leverages compound growth to build long-term wealth
Historical Market Returns: What to Expect
While past performance doesn't guarantee future results, understanding historical returns helps set realistic expectations:
S&P 500 (U.S. Large-Cap): Historically ~8–10% annually (with dividends reinvested)
Global Equity Funds (e.g., VT): Typically ~7–8% annually
Conservative Portfolios: Usually 4–6% with lower volatility
💡 Pro tip: Use conservative estimates (6–7%) for retirement planning to build in a safety margin
How Our Calculator Works
This calculator uses compound interest formulas with monthly compounding to project your investment growth. The calculation accounts for:
- Your initial lump sum investment
- Regular monthly contributions
- Expected annual return (converted to effective monthly rate)
- Optional leverage (borrowed funds) and associated interest costs
Where P₀ = initial investment, Pₘ = monthly contribution, r = monthly rate, n = total months
Leverage: High Reward, High Risk
Leverage (using borrowed money to invest) can amplify your returns—but it equally amplifies your losses and risks. Consider:
- Interest costs compound and reduce net returns
- Market downturns can wipe out leveraged positions
- Margin calls may force you to sell at the worst time
⚠️ Only use leverage if you fully understand the risks and can afford to lose the borrowed amount
📋 Legal Disclaimer
For Educational Purposes Only: All calculations, projections, and information provided by this calculator are for educational and illustrative purposes only. They do not constitute financial advice, investment recommendations, or guarantees of future performance.
No Guarantee of Results: Past performance is not indicative of future results. Actual investment returns may vary significantly from projections due to market volatility, economic conditions, fees, taxes, and other factors.
Consult a Professional: Before making any investment decisions, consult with a qualified, licensed financial advisor who can assess your individual financial situation, goals, risk tolerance, and tax circumstances.
Your Responsibility: You are solely responsible for your investment decisions. The creators of this calculator assume no liability for any financial losses or damages resulting from your use of this tool.