Question 1

What is dollar cost averaging (DCA)?

Accepted Answer

Dollar cost averaging is an investment strategy where you invest a fixed amount at regular intervals (e.g., $100/month) regardless of the asset price. This reduces the impact of volatility — you buy more when prices are low and less when prices are high, resulting in a lower average cost per unit over time.

Question 2

How do I calculate DCA returns?

Accepted Answer

For each purchase period, divide your fixed investment amount by the asset price to get units bought. Sum all units purchased, then multiply by the current price to get your total value. Subtract total invested to get profit. Example: $100/month into BTC for 5 years = 60 purchases at varying prices.

Question 3

Is DCA better than investing a lump sum?

Accepted Answer

Historically, lump sum investing outperforms DCA about 66% of the time because markets tend to go up over time. However, DCA reduces timing risk and is psychologically easier — you avoid the regret of investing everything at a peak. DCA is particularly useful for volatile assets like crypto.

Question 4

What is the best day to DCA?

Accepted Answer

Research shows the specific day of the month has minimal impact on long-term DCA returns. Consistency matters more than timing. Pick a day that works for your budget (e.g., payday) and stick to it. This calculator assumes purchases on the 1st of each month.

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