See how regular investing adds up over time.
Start with your current investment balance across all accounts.
How much you save or invest monthly or annually.
Enter your expected annual return. Use 7% as an inflation-adjusted average.
See your projected growth, total contributions, and compound interest earned.
Future value formula with periodic contributions and compound growth.
Starting to invest at 25 vs 35 can mean 2x more retirement savings due to compound interest.
Always maximize your employer 401(k) match — it's essentially free money you're leaving on the table.
Dollar cost averaging means investing a fixed amount at regular intervals (e.g., $500/month) regardless of market conditions. When prices are high, you buy fewer shares. When prices are low, you buy more shares. Over time, this averages out your cost per share and removes the emotion and timing risk from investing. Most 401(k) contributions are already DCA by default.
Historically, lump sum investing beats DCA about 68% of the time because markets trend upward. However, DCA reduces risk of investing everything at a market peak. If you receive a $50,000 bonus: lump sum maximizes expected return, but DCA over 6-12 months provides psychological comfort and limits downside. For regular income (monthly salary), DCA is natural and effective.
Invest at least 15-20% of gross income for retirement. If that feels too high, start with what you can — even $100/month. At 8% average return, $100/month becomes $149,000 in 30 years, $300/month becomes $447,000, and $500/month becomes $745,000. Automate your investments so it happens before you can spend the money. Increase by 1% every raise.
For most DCA investors: low-cost broad market index funds are ideal. Consider: S&P 500 index fund (VOO, SPY), Total Stock Market (VTI, VTSAX), or Target-Date Fund (set it and forget it). Keep expense ratios under 0.20%. Avoid actively managed funds with high fees — over 30 years, a 1% fee difference can cost you 25% of your total returns.
DCA actually shines during bear markets — you're buying more shares at lower prices, which boosts returns when the market recovers. Example: $500/month during 2008-2009 crash bought shares at deep discounts that tripled in value by 2013. The key is staying consistent and not stopping investments during downturns. Market downturns are effectively 'sales' for long-term DCA investors.