How does DCA reduce average cost?

By investing a fixed dollar amount, you buy more shares when prices are low and fewer when high. This naturally lowers the average cost per share versus a lump sum at any fixed price.

Is DCA better than lump sum investing?

Lump sum beats DCA about 2/3 of the time in rising markets. DCA reduces regret risk and is best when you cannot invest a lump sum or fear market timing.

Example: $500/month into stock at $10, $8, $12

50 + 62.5 + 41.67 = 154.17 shares for $1,500. Average cost = $9.73 vs average price of $10. DCA yielded a 2.7% discount.

Dollar-Cost Averaging Price Calculator

Calculate the average cost per share when investing fixed amounts at different prices. Shows how DCA reduces average cost vs lump sum at market peak.

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Frequently Asked Questions

How does DCA reduce average cost?

Is DCA better than lump sum investing?

Example: $500/month into stock at $10, $8, $12