Dollar-Cost Averaging Calculator

Dollar-cost averaging means investing the same dollar amount on a schedule, such as $500 on the first of every month, whatever the price. Because the amount is fixed, you automatically buy more shares when the price is low and fewer when it is high. Most people already do this through payroll contributions to a 401(k).

Paste the prices you actually paid (or the fund's price on each purchase date) and the calculator returns your share count, your average cost per share, the value at the latest price, a money-weighted annualized return and what the same total would be worth if it had all gone in at the first price. If you have no price history to hand, the example price paths show how averaging behaves when prices are flat, rising, falling or swinging.

shares bought_i = (A − fee) ÷ P_i

average cost = total invested ÷ total shares = n ÷ (1/P₁ + 1/P₂ + … + 1/P_n) with no fees

A is the amount invested each time, P_i the price at purchase i and n the number of purchases. With no fees, the average cost is the harmonic mean of the prices, and the harmonic mean of positive numbers is never larger than their ordinary (arithmetic) mean. So a fixed-dollar plan always buys at or below the simple average price; the two are equal only when the price never changes.

That does not mean averaging beats investing all at once. A lump sum put in at the first price owns more shares from the start whenever prices go on to rise. The annualized return shown is money-weighted: it is the internal rate of return of the cash flows (each purchase out, the holding valued at the last price), turned into a yearly rate using your purchase frequency.

Buying $300 at $30, $20, $25 and $30 gets 10 + 15 + 12 + 10 = 47 shares for $1,200. The average cost is 1,200 ÷ 47 = $25.53, while the simple average of the four prices is $26.25. At the final $30 price the holding is worth $1,410.00, a gain of $210.00 even though the price ended where it started. A $1,200 lump sum at the first $30 price would be worth exactly $1,200.00.

$500 a month for 24 months starting at $50, compared with investing the full $12,000 at the first price. Each path is a simple pattern computed by the calculator, not market data.

On the rising path the lump sum ends $1,599 ahead because all the money rode the whole rise. On the falling path averaging loses $1,284 instead of $2,477, because later purchases were made at lower prices. Averaging trades some expected return for less regret about the timing of a single large purchase.

• Average cost is your cost basis per share for tax purposes if you sell the whole position (fees included). Brokers may track each purchase lot separately.
• Value and gain use the last price in your list. Add today's price as the final entry if your last purchase was some time ago, keeping in mind that it then counts as one more purchase.
• Annualized return is only meaningful over a year or more. Over a few months, small price moves turn into large yearly percentages. It shows n/a when the rate cannot be solved.
• Dividends are not included. For a fund that pays them, total return will be higher than shown.

Vanguard's 2012 study of US, UK and Australian markets found that investing a lump sum immediately beat spreading it over 12 months about two-thirds of the time, because markets rose more often than they fell. Averaging did better in the periods when prices fell soon after the start. The study noted that averaging can still suit an investor whose main worry is putting everything in just before a fall. That finding applies to money you already have; if you invest from each paycheck, regular purchases are simply how the money arrives. Past patterns do not guarantee future results, and your own outcome can only be measured afterward, with the prices you actually paid.