Dollar Cost Averaging Calculator
Simulate periodic fixed-amount investments (DCA / SIP). See portfolio growth, total invested, and average cost basis.
Used to calculate units purchased and average cost basis.
Expected annual price appreciation of the asset.
Results
Total Invested
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Final Value
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Total Returns
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Wealth Multiplier
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Total Units Bought
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Avg Cost/Unit
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Final Price/Unit
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Year-by-Year Growth
| Year | Total Invested | Portfolio Value | Returns | Gain % |
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Frequently Asked Questions
Dollar cost averaging (DCA) is an investment strategy where you invest a fixed amount at regular intervals regardless of the asset's price. When prices are low, you buy more units; when prices are high, you buy fewer. Over time, this smooths your average purchase price and reduces the impact of market volatility compared to trying to time the market.
Research shows lump sum investing outperforms DCA about two-thirds of the time in rising markets, because more capital compounds for longer. However, DCA outperforms during market downturns and is far easier to sustain psychologically. For most investors without a large lump sum — and for those who receive income periodically — DCA via monthly SIP is the practical default and still builds substantial wealth over time.
Average cost basis = Total Amount Invested ÷ Total Units Purchased. Because you buy more units when prices are low, the DCA average cost tends to be lower than the arithmetic average of all prices — this is the mathematical advantage of DCA. The lower your average cost relative to the current price, the greater your unrealised gain.
For long-term equity index funds, historical 15–20 year CAGR has been 10–15% per year (Nifty 50 ~13%, S&P 500 ~10% USD). For balanced portfolios (equity + debt), 8–10% is more conservative. Subtract inflation (4–6% in India) to get real returns. This calculator shows nominal returns — adjust your expectations for inflation to understand real purchasing power.
SIP (Systematic Investment Plan) in India is essentially DCA applied to mutual funds. Both involve investing a fixed amount at regular intervals regardless of market conditions. SIP is the product wrapper offered by Indian mutual fund companies; DCA is the underlying investment principle. The mathematics and benefits are identical — this calculator works for both.
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The Mathematical Power of DCA
Dollar cost averaging works because of a mathematical property called the harmonic mean. When you invest a fixed rupee amount at varying prices, your average cost per unit is always less than or equal to the arithmetic average price. This means you automatically "buy low" more effectively than someone who simply splits their investment equally by number of units.
The Compounding Effect
DCA's true power comes from combining systematic investing with long-term compounding. The Nifty 50 has returned approximately 13% CAGR over 20 years. A monthly SIP of ₹10,000 over 20 years at 12% CAGR grows to approximately ₹99.9 lakhs — turning ₹24 lakhs of invested capital into nearly ₹1 crore. The key variable is time, not timing.
Behavioural Advantage
Beyond mathematics, DCA removes the psychological burden of market timing. Market timing is notoriously difficult — even professional fund managers rarely beat the market consistently. By automating periodic investments via SIP, you eliminate decision fatigue, avoid panic selling during corrections, and benefit from market downturns (buying more units at lower prices). Consistency over years matters more than optimising any single purchase.