Dollar-cost averaging: investing on autopilot
Dollar-cost averaging (DCA) is the least glamorous, most reliable way to invest: put in a fixed amount on a schedule and ignore the headlines. It removes the impossible job of timing the market.
How it works
You invest the same dollar amount every period regardless of price. When prices are low you automatically buy more shares; when high, fewer. Over time that smooths your average cost. Project it in the DCA calculator.
Why it beats market timing
Nobody reliably calls tops and bottoms. DCA sidesteps the question — you’re always invested, and contributions from your paycheck compound for decades. Pair it with low-cost index funds and it’s a complete strategy.
Investing a lump sum you already have usually beats DCA on average, because markets tend to rise. For money you earn over time, though, DCA is simply how investing works.
Frequently asked questions
- Does DCA beat a lump sum?
- On average, lump-sum investing wins because markets rise more often than not. DCA trades a little expected return for lower timing risk, and is the natural approach for money invested from income.
- How often should I invest?
- Monthly is common and easy to automate. The exact frequency matters far less than investing consistently over a long period.
- What should I invest in with DCA?
- Many people use broad, low-cost index funds for diversification. The calculator lets you model any expected average return.
Run your own numbers
Put this guide into practice — these calculators run free in your browser.