Question 1

What is dollar-cost averaging (DCA)?

Accepted Answer

DCA is an investment strategy where you invest a fixed amount at regular intervals regardless of price. When prices are low you buy more units; when prices are high you buy fewer. Over time this results in a lower average cost than buying all at once during a peak.

Question 2

Does DCA always beat lump sum investing?

Accepted Answer

Research (including Vanguard's widely cited 2012 study) shows lump sum investing outperforms DCA roughly two-thirds of the time in rising markets, because money is invested earlier and benefits from compounding. DCA primarily reduces the psychological risk of poor timing, not the mathematical risk.

Question 3

How do I calculate my DCA average price?

Accepted Answer

Average Price = Total Amount Invested ÷ Total Units Purchased. This calculator handles multiple purchases at different prices automatically. Your break-even point is this average price.

Question 4

Is DCA suitable for volatile assets like crypto?

Accepted Answer

DCA is commonly used for crypto because of its high volatility — frequent sharp drops allow DCA investors to accumulate more units at lower prices. However, DCA does not eliminate the risk of a prolonged bear market where prices fall continuously.

DCA Calculator

Your DCA Position