# S&P 500 Long-term Dollar-cost Averaging Investing Returns Calculator

This calculator uses a dollar-cost averaging model to compute investing returns for different investment dollar amounts and different investment periods in years. The calculator uses S&P 500 monthly closing prices from Nasdaq Data Link that are adjusted for inflation, splits and dividends. Prices are from January 1905 through the present.

## Inputs

- Starting Year: is the year that the dollar-cost averaging begins. Must be greater than or equal to 1905.
- Initial Investment ($): buys shares one time in January of the first year. Initial Investment must be greater than 0.
- Recurring Monthly Investment ($): buys shares from February through December for the first year. Thereafter Recurring Monthly Investment buys shares from January through December for each year.
- Annual Change in Recurring Monthly Investment ($): is the change in the dollar value of the recurring investment (can be positive, zero or negative). The change begins in January of year two and changes each year in January.
- Investing Period Length (# years): is the total number of years the initial investment and the recurring investments occur. For a 20 year period the first year would include the initial investment and eleven recurring monthly investments. Nineteen years of twelve recurring monthly investments follow.

How the Calculator Works

Here is a simple example that uses the default settings in the input form to help you understand what the calculator does. Suppose you invest $1,000 in the first month of the first year. In the second month through the last month of the first year you invest $100. For the second year you invest $110 for each of the twelve months. After that the monthly amount invested increases each year by $10. So for the last year you invest $290 each month.

For a 20 year investing length the calculator sets the first dollar-cost averaging period from January 1905 through December 1924. It then computes the returns for that period using the dollar-cost averaging model. Next the calculator sets a second dollar-cost averaging period from January 1906 through December 1925. Again it calculates the returns for this period. The calculator continues this process for all possible twenty-year periods from 1905 through the year before the current year. The calculator computes returns for whole years (12 months). For a 20-year investment period there are 99 dollar-cost averaging periods from 1905 through 2022 given the current year is 2023. A 50-year investing period has 69 dollar-cost averaging periods.

The valuations end with the last full year of 12 recurring monthly investments.

If you want want a fixed amount invested each month for all years, set Annual Change in Recurring Monthly Investment to 0 on the input form. If you want want to decrease the amount invested each year, set the Annual Change in Recurring Monthly Investment to a negative number on the input form.

**Interpreting the Results**

The calculator displays its returns for each dollar-cost averaging period in four bar charts:

- Final Dollar Values Chart
- Dollar Gains and Losses Chart
- Percent Gains and Losses Chart
- Average Annual Percent Returns Chart - (Percent Gains and Losses / Investing Length in years)

There are links to tabular results for each chart.

Also the best and worst performing periods based on average annual percent returns are displayed in tables.

**General Observations**

Given the long-term variation in S&P 500 prices as shown in the following price chart the returns of the calculator's four charts follow cyclical patterns. The shape and magnitude of the return cycles are determined by the length of the investment period and investment amounts.

As with real investing, the calculator shows that investing more dollars does not always lead to improved returns. For example, if you buy during rising prices and then evaluate your investments when prices are down, your returns may be lower than when you bought at low prices and evaluated the investment at higher prices.

Historically, low and negative returns tend to occur in clusters with respect to investment dates.

Making continuos investments for decades tend to result in positive returns no matter when and how much money has been invested.

See S&P 500 Long-term Dollar-cost Averaging Investing Returns Calculator - Number of Years Analysis, a companion calculator, for more information.

## S&P 500 Chart 1905 - Present

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