Put the same amount in at a series of prices and see how many shares you own, what you paid on average, and where you stand at today’s price.
Your average cost per share
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Simple average of the prices
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Shares owned
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Total invested
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Value today
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Gain or loss
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How it works
Dollar cost averaging means investing the same amount on a schedule, whatever the price. A fixed amount buys more shares when the price is low and fewer when it is high.
That is why your average cost usually ends up below the simple average of the prices you paid. It does not guarantee a profit, but it takes the guesswork out of timing each buy.
The formula
Shares from each buy = Amount ÷ Price
Average cost = Total invested ÷ Total shares
Worked example
Investing $500 at $50, $40, $45 and $55 buys about 42.70 shares for $2,000, an average cost of $46.84, below the $47.50 simple average. At $52 the shares are worth about $2,220.51, a gain of about $220.51 or 11.0%.
Dollar Cost Averaging questions
Is dollar cost averaging better than investing a lump sum?
When prices rise over time, a lump sum invested right away has usually come out ahead because more money is invested sooner. Dollar cost averaging trades some of that for less risk of buying everything at a peak.
Why is my average cost below the average price?
Because the same dollars buy more shares at lower prices, the cheap buys count for more shares. That pulls the average cost below the plain average of the prices.
Can I include fees?
Lower the amount for each buy by the fee. For example, with a $1 fee on $500, enter $499.
For informational and educational purposes only. Not investment advice, and not a recommendation to buy or sell any security. Results are estimates from the numbers you enter.