What this calculator does
Dollar-cost averaging means investing the same amount of money at regular times, such as every month, whatever the price (Investor.gov). When the price is low, your money buys more shares; when it is high, fewer. Enter the amount you invest each time and the price each time, and the calculator shows your average cost per share, what the shares are worth at the last price, and how that compares with investing the same total all at once at the first price.
How it is worked out
Shares bought each time = amount ÷ price. Average cost per share = total invested ÷ total shares. Example: $200 at prices of $50, $40, $25, $40 and $50 buys 4, 5, 8, 5 and 4 shares: 26 shares for $1,000, an average cost of $38.46, below the $41 average price. At the last price of $50 they are worth $1,300. Investing the whole $1,000 at the first price of $50 would buy 20 shares, worth $1,000 at the end.
Things to know
- Your average cost is always at or below the average of the prices, because a fixed amount buys more shares when prices are low.
- It does not guarantee a profit or protect against losses when prices fall and stay down.
- When prices rise steadily, investing all at once usually ends with more; dollar-cost averaging spreads the risk of a bad start.
- Regular contributions to a 401(k) from each paycheck are a form of dollar-cost averaging.
Frequently asked questions
Is dollar-cost averaging better than investing a lump sum?
Not always. If prices mostly go up, a lump sum invested earlier often ends with more. Dollar-cost averaging lowers the risk of investing everything just before a drop.
Why is my average cost lower than the average price?
Because the same dollar amount buys more shares at low prices and fewer at high prices, so the low prices weigh more.
Where do the prices come from?
You type them in: past prices of a fund you own, or made-up prices to see "what if". The ones in the boxes are examples.
Is my information saved?
No. The numbers stay on this page.