Dollar Cost Averaging (DCA) Simulator

DCA Simulator

See the power of consistent Dollar Cost Averaging over time.

How This Tool Works

Dollar Cost Averaging (DCA) is the practice of investing a fixed dollar amount at regular intervals, regardless of the asset's price. This simulator projects how your portfolio would grow based on your monthly contribution and an estimated growth rate.

  • The Math: It sums up your contributions + compounded growth for each period.
  • The Advantage: You buy more coins when prices are low and fewer when high, automatically lowering your average entry price.

How to Use

  1. Monthly Investment: How much spare cash can you invest? (e.g., $500).
  2. Duration: How many years will you keep this up?
  3. Expected Growth: Be realistic. The S&P 500 averages 10%. Crypto might do 50% or -50%.
  4. Initial Lump Sum: Are you starting with a balance?

Example Strategy

You invest $100 every week for 5 years.
Average Growth: 10%/year.

• Total Invested: $26,000
• Portfolio Value: $33,689
• Profit: +$7,689 (ROI: ~30%)

Why This Reduces Risk

Trying to time the bottom is nearly impossible. DCA ensures you never go "all in" at the top. It removes emotions from investing.

Limitations & Disclaimer


• This uses a fixed annual return, which never happens in real life. Real markets are volatile.
• Past performance does not guarantee future results.

FAQs

Does DCA guarantee profits?

No. If the asset price drops continuously and never recovers, DCA will still result in a loss. DCA only mitigates entry timing risk, not asset risk.

How often should I invest?

Weekly or Monthly is most common. Buying daily might incur too many transaction fees, while buying yearly misses the point of averaging.

Lump Sum vs DCA: Which is better?

Statistically, Lump Sum often outperforms DCA in a bull market (because you buy early). However, DCA is psychological protection. It prevents you from buying the absolute top and allows you to sleep better at night.