Methodology

Data Sources

The DCA Calculator and the Lump Sum vs DCA Calculator use monthly closing prices from Yahoo Finance for every asset, including the S&P 500 (tracked through the SPY ETF). By default it uses Yahoo's dividend- and split-adjusted closes, so results assume dividends are reinvested (total return); turning off "Reinvest dividends" switches to unadjusted closes (price return only). If live data cannot be loaded, the S&P 500 falls back to built-in sample data calibrated to documented historical waypoints (major peaks and troughs), and the calculator labels it as sample data. The example figures on the home page are computed from live S&P 500 data (dividends reinvested) whenever the site is rebuilt, falling back to the sample data if that fails.

The SIP Calculator uses a mathematical formula based on standard annuity calculations — it does not require historical market data. All the tools are intended solely for educational and illustrative purposes.

DCA Calculator Formula

For each month in the selected date range:

1. Shares purchased = Monthly Investment ÷ Closing Price
2. Total shares accumulates each month
3. Portfolio value = Total Shares × Latest Closing Price

Annual return is the money-weighted annualized return (internal rate of return): the yearly rate at which every monthly contribution, compounded from the month it was invested, grows to the final portfolio value. Unlike a simple CAGR on total invested, it accounts for later contributions having less time to grow.

Lump Sum vs DCA Calculator

Both strategies start with the same amount in the same month and are valued at the closing price of the same end month.

1. Lump sum: the whole amount buys shares at the start of the first month (the previous month's close)
2. DCA: at the start of each of the first N months, the cash still waiting is divided by the purchases left, and that part buys shares
3. Waiting cash earns the chosen annual interest rate, compounded monthly; the interest is invested with the later purchases
4. DCA's value includes any cash not yet invested

Annual return here is the compound annual growth rate of the whole amount over the period, since both strategies start with the same money on the same day. How often lump sum won repeats the comparison for every start month in the asset's history that leaves a complete period of the same length.

Compound Interest and Planning Calculators

The compound interest, savings goal, FIRE, 401(k) and Roth IRA calculators project growth from a rate you choose, not from market prices. Month by month:

1. Balance = previous balance × (1 + monthly rate) + this month's contribution, added at the end of the month
2. Monthly rate = (1 + annual rate ÷ n)^{n ÷ 12} − 1, where n is the number of compounding periods a year (1 unless you choose otherwise), so 7% a year grows a balance by exactly 7% over a year
3. "Today's dollars" divides each amount by (1 + inflation)^{years from now}

The FIRE calculator works entirely in today's dollars. Its FIRE number is yearly spending ÷ withdrawal rate, the portfolio grows at the return after inflation, (1 + return) ÷ (1 + inflation) − 1, and monthly saving is assumed to rise with inflation. The Coast FIRE number is the FIRE number ÷ (1 + real return)^{years to retirement age}.

The 401(k) calculator works a year at a time: your contribution is your salary (raised each year) × your contribution rate, capped at the IRS limit for your age; the employer adds its match on your contribution up to the matched share of pay. Each year's total goes in in 12 equal monthly parts. The IRS limits are this year's, raised each later year by your inflation rate. The Roth IRA calculator works the same way with the IRA limit; a planned contribution rises with inflation and is capped at the limit. Its taxable-account comparison takes the same balance and subtracts tax on the growth at the rate you choose, once, at the end.

Real returns vary from year to year, and these projections assume a steady rate, so treat them as estimates.

Inflation Calculator

The inflation calculator uses the U.S. Consumer Price Index for All Urban Consumers (CPI-U, all items, not seasonally adjusted) from the Bureau of Labor Statistics, loaded from FRED (series CPIAUCNS) each time the site is rebuilt. An amount is restated as amount × CPI of the target month ÷ CPI of the starting month. The average yearly rate is the compound rate between the two months. BLS published no CPI for October 2025 (federal government shutdown); that month uses the geometric midpoint of September and November 2025. Real returns are (1 + nominal return) ÷ (1 + inflation) − 1.

SIP Calculator Formula

Standard SIP uses the future value of an annuity due:

FV = P × [((1 + r)^n − 1) / r] × (1 + r)
where:
  P = monthly SIP amount
  r = annual return rate ÷ 12
  n = years × 12

Step-Up SIP uses an iterative month-by-month simulation because the monthly contribution changes each year and there is no closed-form solution for arbitrary step-up periods.

Limitations and Assumptions

• Returns are nominal (not inflation-adjusted) unless explicitly stated.
• No taxes, fund expense ratios, or transaction costs are deducted.
• DCA assumes one investment per month at that month's closing price.
• SIP instalments are invested at the start of each month and compound monthly.
• Past performance does not guarantee future results.

About Wealth DCA

Wealth DCA is an independent financial education tool. We are not a registered investment adviser. Nothing on this website constitutes financial, investment, legal, or tax advice. Always consult a qualified professional before making investment decisions.