Dollar Cost Averaging Calculator

What this calculator does

This calculator projects what a regular investing schedule builds over time. Enter the amount you invest each period, how often, the annual return you expect, and the number of years, and it returns the final portfolio value, the total you contributed, and how much of the balance came from investment returns rather than your own money.

The split between contributions and returns is the output worth watching. Following it year by year shows where the crossover sits — the point at which your portfolio gains more from market returns in a year than from anything you pay in. Reaching that point is the genuine milestone in a long investing plan.

When to use it

Use it when setting up or reviewing a monthly direct debit into a Stocks and Shares ISA and you want to know where it leads. Choosing between £250 and £400 a month, checking whether a contribution supports a retirement target, or seeing what fifteen years of a modest schedule actually produces are all the same calculation.

It also gives you an honest answer on the lump sum question. If you have £50,000 in cash after a bonus or a property sale, model it as a lump sum in the compound interest calculator and as a phased schedule here. The difference is what you are paying for peace of mind — sometimes worth it, and better seen than guessed at.

Understanding the inputs

Deposit amount and frequency set the schedule. Daily, weekly, monthly, and yearly are supported, and the results sit close enough together that you should match your pay cycle rather than optimise the frequency.

Annual return drives everything, so choose it deliberately and net it down for charges — if you assume 7 percent gross and pay 0.5 percent in platform and fund fees, enter 6.5. Investment period is where the real leverage sits: extending from ten years to twenty roughly triples the result from the same monthly commitment. Keep contributions within the £20,000 annual ISA allowance if you want the whole projection to stay tax-free.

How is this calculated?

FV = PMT × ((1 + r)^n − 1) / r, where PMT is the monthly-equivalent deposit, r is the monthly rate, and n is the total months.

A worked example

Invest £300 a month for fifteen years at an assumed 6 percent annual return. You contribute £54,000 and finish with roughly £87,250, so investment returns supplied about £33,250 — a little under 40 percent of the balance.

Compare that with putting the whole £54,000 in on day one and leaving it fifteen years at the same rate: roughly £129,400. The £42,000 gap is the cost of investing gradually rather than immediately, and it is the honest counterweight to the comfort phasing provides. At £300 a month you are also using only £3,600 of a £20,000 ISA allowance, so there is considerable room to increase.

Limitations and assumptions

The key caveat is structural: this model applies a flat, constant return every period, which is not how markets behave and not how pound-cost averaging actually works. The strategy's core mechanism — buying more units when prices fall — depends on volatility, and a constant-return model contains none. Read the output as a compounding projection, not a simulation.

Past performance does not predict future returns, and any individual ten or fifteen year window can land far above or below the long-run average. The calculator also excludes platform and fund charges, tax outside an ISA, and inflation, each of which reduces what you keep. This is not regulated financial advice.