Model DCA investment returns over time. Compare investing fixed amounts monthly vs a lump sum with growth chart, average cost basis, and total return.
Future value of regular contributions: FV = PMT × [(1 + r)^n − 1] ÷ r
where PMT = regular payment, r = periodic return rate, n = number of periods.
For monthly contributions: r = annual return ÷ 12 ÷ 100; n = years × 12.
Worked example: 500/month for 20 years at 7% annual return (0.583%/month). FV = 500 × [(1.00583)^240 − 1] ÷ 0.00583 ≈ 130,000. Total contributed: 500 × 240 = 120,000. Investment return generated: approximately 10,000 (at 7% nominal; real return lower after inflation).