ATLASDollar-cost averaging (DCA)
Investing glossary · Practice and portfolio habits
Investing a fixed amount at regular intervals, regardless of the price, so you buy more shares when they are cheap and fewer when they are expensive.
Definition
Dollar-cost averaging (DCA) means investing the same amount at regular intervals, such as 100 every week, regardless of the price. Because the amount is fixed, you automatically buy more shares when the price is low and fewer when it is high, which brings your average cost per share below the average price.
DCA reduces the risk of investing everything at a bad moment and builds discipline. But it is not a way to beat the market: if prices tend to rise, investing a lump sum earlier has historically done better more often than not. Its real advantage is behavioral and practical, matching the way most people earn and save.
Worked example
Suppose you had invested 100 in Microsoft (MSFT) every week for the last 53 weeks, $5,300.00 in total. You would have an average cost of $442.49 per share, and your holding would now be worth $6,379.29, a return of +20.4%. Investing the whole $5,300.00 on the first day would be worth $5,391.00, a return of +1.7%.
Whether DCA beat the lump sum here depends on the path the price took; it will not win every time.
How ATLAS uses it
ATLAS shows the expected range and the odds for each stock and portfolio, which helps you judge how much the price you pay at entry really matters.
Related in ATLAS: Portfolio builder →Browse all ATLAS tools →See it on a real stock
The example above uses these companies. Open their pages for the full numbers:
Frequently asked questions
Is DCA better than investing a lump sum?
On average, investing a lump sum earlier has beaten DCA in rising markets, but DCA lowers the regret and risk of a badly timed entry.
Does DCA guarantee a profit?
No. If the price keeps falling you accumulate shares that keep losing value. It only averages the price you pay.
Related terms
Put the idea to work on your own stocks
Open any company in ATLAS to see its fair value, its odds of rising and its risk numbers side by side.
Try ATLAS →Not investment advice. ATLAS estimates are produced by statistical models from public data; they can be wrong and past performance does not predict future results. Consider your own situation before investing. Disclaimer