Methodology

Data Sources

The DCA Calculator uses 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. Both 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.

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.