Dollar Cost Average Calculator

The formula

Shares bought per period = amount ÷ price
Total invested = amount × number of periods
Average price = total invested ÷ total shares

This is a harmonic mean of the prices, not an arithmetic one. Because the same money buys more shares when the price is low, the average cost always sits below the simple average of the prices you paid. That is the whole mechanism of dollar-cost averaging.

Worked examples

200 at 10, 12, 11, 9, 10, 13 → 112.455 shares → $10.67
200 at 20 then 10 → 30 shares → $13.33
200 at 9 then 11 → 40.404 shares → $9.90
200 at 10, 10, 10 → 60 shares → $10.00
200 at 5, 15 → 53.333 shares → $7.50
200 at 50, 25 → 12 shares → $33.33

Why the average is not the mean

The 5 and 15 case makes it obvious: the simple mean is $10, but the realised cost is $7.50. Half the money bought at 5 collected 40 shares and half at 15 collected 13.3, so most of the position was built at the cheap price. Volatility is what makes this work — with a flat price, the two averages coincide exactly.

The flip side is that a steadily rising market makes lump-sum investing win. If the price only goes up, buying everything on day one beats averaging in, because later buys are all more expensive. Averaging is a way to reduce the risk of a bad entry, not a way to beat a rising market.

What the calculation leaves out

Trading fees hit the average directly. On a $200 buy, a $5 commission is 2.5% of every purchase, which pushes the effective cost above the calculated average; on a $20 commission it is 10% and averaging in becomes self-defeating. Fractional shares, if your broker supports them, remove the leftover-cash drag that whole-share buying creates.

Dividends, taxes and currency movements are also outside the model. The number to track is the average cost basis the broker reports, which handles reinvestment and corporate actions properly, and which is what you will need at tax time.

Frequently Asked Questions