Dollar-Cost Averaging Calculator

Dollar-Cost Averaging: A Disciplined Investment Strategy

Dollar-cost averaging (DCA) is the practice of investing a fixed dollar amount at regular intervals — regardless of whether the market is up or down. By purchasing more units when prices are low and fewer when prices are high, DCA naturally lowers your average cost per unit over time. This approach is especially well-suited for Canadian investors contributing to TFSAs or RRSPs through automatic payroll deductions.

Research consistently shows that lump-sum investing outperforms DCA roughly two-thirds of the time, because markets trend upward over the long term. However, DCA’s real advantage is behavioural: it removes the emotional decision of when to invest and prevents the paralysis of waiting for the “perfect” entry point. For most Canadians who invest from each paycheque, DCA is not a deliberate choice but a natural consequence of earning and saving periodically.

DCA vs. Lump Sum: Key Considerations

Canadian brokerages like Wealthsimple, Questrade, and the big-bank discount platforms all support automatic recurring purchases with no commission on Canadian-listed ETFs. Setting up a monthly contribution of even $200–$500 into a diversified, low-cost index ETF can build substantial wealth over 20–30 years through the combined power of DCA and compound growth.