Dollar-Cost Averaging Calculator Vanguard

Introduction & Importance

Dollar-cost averaging (DCA) is an investment strategy that involves investing a fixed amount of money regularly, regardless of share prices or market conditions. Vanguard’s DCA calculator helps you understand and implement this strategy effectively.

How to Use This Calculator

1. Enter the amount you plan to invest each period (monthly, quarterly, or annually).
2. Select the investment frequency.
3. Enter the number of years you plan to invest.
4. Click ‘Calculate’ to see your projected results.

Formula & Methodology

The formula for dollar-cost averaging is based on the future value of an annuity. The calculator uses the following formula:

FV = PMT * (((1 + r)^n - 1) / r)

Where:

• FV is the future value of the investment.
• PMT is the periodic payment (investment amount).
• r is the annual interest rate (assumed to be 7% for this calculator).
• n is the number of periods.

Real-World Examples

Data & Statistics

Historical Market Performance (S&P 500)

Year	Total Return (%)

Vanguard Fund Performance (VTSAX)

Year	Total Return (%)

Expert Tips

• Start early and invest regularly.
• Consider your risk tolerance and investment goals.
• Review and adjust your strategy periodically.

Interactive FAQ

What is dollar-cost averaging?

Dollar-cost averaging is an investment strategy that involves investing a fixed amount of money regularly, regardless of share prices or market conditions.

For more information, see the Vanguard guide to dollar-cost averaging.

Learn more about dollar-cost averaging from the SEC.