Finance & Economics / Personal Finance
Investment Compound Growth Calculator (Dollar Cost Averaging)
Starting amount (enter 0 if none)
Amount invested each month (Dollar Cost Averaging)
Historical S&P 500 average: ~10% (use 7-8% for conservative estimate)
Increase monthly contributions each year (e.g., 3% for raises/inflation)
Understanding Dollar Cost Averaging (DCA)
What is Dollar Cost Averaging? Investing a fixed amount regularly (weekly, monthly) regardless of market conditions, rather than investing a lump sum all at once.
How DCA Works:
- Invest $500/month every month for 30 years
- When market is down, $500 buys more shares
- When market is up, $500 buys fewer shares
- Over time, you average out your purchase price
- Compound interest works on all your accumulated shares
Key Benefits:
- Lower Risk: Don't worry about market timing
- Discipline: Automated investing builds wealth systematically
- Emotional Control: Less stress than trying to time the market
- Accessibility: Start with small amounts, grow over time
Example:
- $500/month for 30 years = $180,000 contributed
- At 8% annual return = ~$745,000 final value
- Investment gains = $565,000 (3.1x your contributions!)
Best Practice: Set up automatic monthly transfers from your checking to your investment account. "Pay yourself first" before spending.
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