Project a regular investing plan.
Future value
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Total invested
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Growth
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Your breakdown
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Buying the same dollar amount, not the same number of units
Dollar-cost averaging means investing a fixed sum on a regular schedule, every month say, no matter what the market is doing. When prices are high your $500 buys fewer units, when prices dip it buys more, and over time your average cost per unit smooths out. The real value is psychological as much as mathematical: it takes market timing off the table and turns investing into a habit you do not have to agonise over. For most New Zealanders drip-feeding into an index fund or topping up KiwiSaver, this is exactly how money actually goes in.
This calculator projects where that habit leads. You enter the monthly contribution, an expected annual return and a time horizon. It compounds the balance month by month, adding your contribution and applying one twelfth of the annual return each month, then shows the projected future value alongside how much you actually put in and how much is pure growth.
$500 a month for fifteen years
Run the default. You invest $500 a month for 15 years at a 7 percent annual return, applied as roughly 0.583 percent a month. That is 180 contributions totalling $90,000 of your own money. The compounding turns it into about $158,481, so growth accounts for $68,481, more than three quarters of what you contributed.
The split below makes the point that gets people to keep going: by year fifteen, the growth is nearly as large as everything you contributed.
Where the growth actually comes from
Two forces are at work. The first is simply that your money is invested for longer, so the dollars you contributed in year one have fifteen years to compound while the dollars from year fourteen have barely started. The second is reinvested returns earning their own returns. Notice the assumption matters enormously. Drop the return from 7 to 5 percent and the end balance falls sharply, because compounding rewards the higher rate over long periods. That is why I treat the return input as a band, not a promise. Run it at 5, 6 and 7 percent and look at the range, then plan around the lower end.
PIE tax, not capital gains tax, on the way
New Zealand has no general capital gains tax, so a buy-and-hold investor in shares is usually not taxed on the gain itself. But most local funds are portfolio investment entities, and PIE income is taxed annually at your prescribed investor rate, which tops out at 28 percent rather than the 39 percent top income rate. Getting your prescribed investor rate right is one of the easiest wins in New Zealand investing, since an incorrect rate either overtaxes you or leaves a bill. If you dollar-cost average into offshore shares directly instead of through a fund, the foreign investment fund rules can apply once your holdings cost over $50,000, taxing a deemed 5 percent return regardless of what the shares did. The model here is pre-tax, so shade your expected return down a little to account for PIE tax and fund fees. A common mistake is celebrating the gross figure and forgetting the management fee quietly skims the return every single year.
Is dollar-cost averaging better than investing a lump sum?
On the maths alone, investing a lump sum tends to beat drip-feeding because the money is exposed to growth sooner, and markets rise more often than they fall. But most people do not have a lump sum, they have a monthly surplus, so dollar-cost averaging is the realistic choice. It also protects you from putting everything in right before a downturn, which matters more for sleep than for spreadsheets.
Should I stop contributing when the market falls?
No, and this is the whole point of the strategy. A falling market is when your fixed contribution buys the most units, setting up larger gains in the recovery. Pausing during dips means you only ever buy when prices are high, which is the opposite of what works. The investors who do best are usually the ones who automate the contribution and stop watching.