What does this tool do?
Dollar-cost averaging spreads purchases across price points, so you buy more units when prices are low and fewer when they are high. This calculator shows the resulting average cost per unit.
The Formula
Average cost = Total invested ÷ (A ÷ P1 + A ÷ P2 + A ÷ P3)Frequently Asked Questions
Does averaging guarantee a profit?
No. It changes the timing of purchases, not the quality of the asset. A falling price can still leave the position at a loss.
Why is the average cost below the simple mean price?
Equal dollar purchases buy more units at lower prices, so the average is pulled toward the cheaper purchases.