Dollar-Cost Averaging — DCA with Concrete Numerical Examples

Definition

Dollar-Cost Averaging (DCA) is a strategy of regularly investing a fixed amount in a chosen instrument, regardless of the current price. You buy more units when the price is low and fewer when the price is high — automatically averaging the purchase price.

Numerical Example: DCA on ETF

You invest 1,000 PLN monthly in VWCE ETF for 6 months:

Summary:

• Total invested: 6,000 PLN
• Total units purchased: 65.42 units
• Average purchase price: 6,000 / 65.42 = 91.72 PLN
• Portfolio value in June: 65.42 × 105 = 6,869 PLN
• Profit: +869 PLN (+14.5%)

If you invested all 6,000 PLN in January at 100 PLN:

• 60 units × 105 PLN = 6,300 PLN → profit +300 PLN (+5%)

In this scenario, DCA won because it allowed buying cheaply during declines.

When Does DCA Lose?

When the market rises in a straight line. If the ETF price rose monthly from 100 to 130 PLN, a lump sum investment at the start would give better results. Statistically, in a rising market lump sum wins in ~65% of cases.

So Why DCA?

Despite the statistical advantage of lump sum, DCA has key benefits:

1. No timing required — you don't have to guess whether the market is "high" or "low"
2. Reduces emotional risk — you're not afraid of investing everything at the peak
3. Fits real life — most people don't have 60,000 PLN at once, but have 1,000 PLN monthly
4. Builds habit — automatic, regular investing

DCA in Practice in Poland

Set up a standing order to your brokerage account (e.g., XTB, mBank, Bossa) and buy your chosen ETF monthly. Some platforms (e.g., XTB) offer fractional ETF purchases, which makes DCA with precise amounts easier.

How Freenance Can Help

Freenance tracks your regular investments and shows average purchase price, total return, and averaging effect. You can see how DCA builds your portfolio month by month.

👉 Track your DCA investments in Freenance — freenance.io