What is dollar cost averaging (DCA)?

Dollar cost averaging means investing a fixed amount at regular intervals (e.g. $500 per month) regardless of whether markets are up or down. When prices are low, your fixed amount buys more units. When prices are high, it buys fewer. Over time, this averages out your purchase price and removes the pressure of trying to time the market.

Is DCA better than lump sum investing?

Research shows that lump sum investing outperforms DCA about two-thirds of the time, because markets tend to rise over time and having your money invested earlier means more time for growth. However, DCA is the natural approach for most people who invest from regular income. It also reduces the risk of investing a large sum just before a market downturn, and is psychologically easier to stick with.

How much can I make investing $500 a month?

At an 8% average annual return, investing $500 per month for 10 years grows to approximately $91,500 (on $60,000 invested). Over 20 years it reaches about $295,000 (on $120,000 invested), and over 30 years about $745,000 (on $180,000 invested). The longer you invest, the more compound growth dominates your total returns.

What is a realistic return for an Australian ETF portfolio?

Over the long term (20+ years), a diversified Australian shares ETF has historically returned around 9–10% per year including dividends, while a global shares ETF has returned around 8–9%. A balanced portfolio mixing shares, bonds, and property typically returns around 6–8%. Past performance does not guarantee future results, and returns vary significantly year to year.

Should I invest weekly, fortnightly, or monthly?

The difference in returns between weekly, fortnightly, and monthly investing is negligible over long time periods. The most important factor is consistency. Choose a frequency that aligns with your pay cycle so it feels automatic. If you are paid fortnightly, invest fortnightly. The best strategy is the one you actually stick with.

Dollar Cost Averaging Calculator

Enter your regular investment amount, expected return, and time period to see how consistent investing builds wealth over time. Compare dollar cost averaging against a lump sum investment.

Last verified: 1 July 2025

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Dollar Cost Averaging Calculator

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