Dollar-cost averaging is investing a fixed amount at regular intervals regardless of market conditions — the default for 401(k) payroll deductions and the optimal strategy for most investors.
The 2022 crash proved DCA works
DCA investor putting $500/month through 2022-2024 (total $18,000) ended with ~$24,800. A lump-sum investor who panic-sold in Oct 2022 locked in a loss around $13,600.
DCA vs lump sum
Vanguard research shows lump sum wins ~68% of the time. But for income-based investing, DCA is the only practical strategy and prevents market-timing traps.
Use our Compound Interest Calculator to model this.
Frequently asked questions
What is DCA?
Investing a fixed amount regularly regardless of market conditions.
Lump sum or DCA better?
Lump sum wins statistically, but DCA is the only option for regular income deployment.
How do I automate it?
Most brokers support recurring purchases; 401(k) payroll deduction is already automatic.
Does DCA work in a bear market?
Yes — bear markets are when it works best, buying more shares at lower prices.
How much should I invest monthly?
As much as you can sustain consistently — consistency beats amount.