This is what the dollar-cost averaging formula looks like: If Jeff had invested the entire $3,000 in Month 1, he would have owned 120 shares. one payment a month for 12 months). Joe works at ABC Corp. and has a 401(k) plan. He receives a paycheck of $1,000 every two weeks. ). But unless you can predict these downturns ahead of time, you have no scientific reason to believe that dollar cost averaging will give you an … This is a simple calculator which answers the question: "If I'm dollar cost averaging my investment purchases, how often should I buy in order to minimise fees while not wasting too much potential return?" Dollar Cost Averaging (DCA): The act of investing all of your available money over time. Dollar-cost averaging means investing the same amount of money in an asset (stocks) at periodic intervals irrespective of its price thereby reducing the risk of price volatility in the market. For example, an investor would invest $100 every month on the first day of the month for five years in a particular mutual fund. The Purpose of Dollar-Cost Averaging Assuming the stock turns around, this ensures a lower breakeven point for the stock position and higher gains in dollar terms than would have been the … Average Cost Basis Calculator. Following is an average down stock formula that shows you how to calculate average price.. Average Stock Formula Real World Example of Dollar-Cost Averaging . A Dollar Cost Averaging Calculator Is Not Just For Mutual Funds NOTE : This calculator can be used on any investment for which you can project an average annual return (e.g., mutual funds, exchange traded funds, certificates of deposit, savings accounts, money market accounts, savings bonds, etc. If you have Android device, you can find the average cost of your stock purchases with the average cost basis calculator which you can install for free. Dollar-cost averaging results in lower average costs when the stock price is in a downward trajectory (as in the example). The main advantage of averaging down is that an investor can bring down the average cost of a stock holding quite substantially. Get stock average calculator for Play Store. Dollar Cost Averaging Calculator 0 comments. Using dollar-cost averaging, his $3,000 purchased 140 shares. When shares are cheap, you might pay $2,500 and buy 200 shares. Dollar Cost Averaging Calculator – Example To clarify with the example above. However, the typical approach is equal-sized payments over a specific time period (i.e. With dollar-cost averaging, you can spread out that investment. Dollar-Cost Averaging Definition. But if the price rises in the third quarter, you could use your $2,500 and buy just 80 shares. How you decide to invest these funds over time is up to you. 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