Dollar-Cost Averaging Explained in Numbers: A Ten-Year Numerical Scenario
An automatic transfer of €100 each month, regardless of market levels: that, in essence, is the entire promise of dollar-cost averaging. Some brokers present it almost as a sure thing, a way to buy "at the best price" without ever mistiming the market. The reality, as shown by the numerical examples that brokers themselves publish, is both more modest and more interesting. The mechanism guarantees nothing about returns; it does, however, impose discipline, and this discipline carries a concrete cost for a Belgian investor placing small sums each month. This is what two verifiable examples and a pedagogical extension demonstrate step by step, constructed to understand what happens over a ten-year horizon.
What Is Dollar-Cost Averaging?
Dollar-cost averaging (often abbreviated as DCA) consists of investing a fixed amount at regular intervals, regardless of the market price at the time of purchase, rather than investing a lump sum all at once at what seems like the "ideal" moment, according to the definition given by broker BUX (2024). The investor doesn't try to guess whether the price will rise or fall next week: instead, they buy according to a fixed schedule, and allow the average purchase price to form mechanically as payments accumulate.
This average price is calculated simply: divide the total amount invested by the total number of shares held. BUX illustrates this calculation with a numerical example: an investor who placed €400 total and accumulated 10.5 shares obtains an average purchase price of €38.10 per share. This formula, and only this one, allows you to judge whether the method has "worked well" over a given period—not intuition about market trends.
Starting a Plan: Five Concrete Steps
Before diving into the numerical examples, it's useful to know what setting up such a plan looks like from a broker's perspective. BUX (2024) summarizes the approach in five steps:
- Define an investment objective and time horizon.
- Choose the product—ETF or individual stock—for your plan.
- Set a monthly amount to invest.
- Create a recurring payment schedule with the broker.
- Review the strategy once a year.
This sequence guarantees no results; it simply organizes the process. It is precisely this repetitive framework, and not a performance promise, that constitutes the real value of the mechanism—a point worth keeping in mind before reading the two numerical examples that follow.
Ten Months at BUX: Step-by-Step Calculation
The first verifiable example covers ten months of a €100 monthly plan, as described by BUX (2024)—only the first three rows of the table are detailed below. The share price varies from month to month, and the number of shares purchased varies inversely:
| month | price per share | amount invested | shares purchased |
|---|---|---|---|
| 1 | €50 | €100 | 2 |
| 2 | €40 | €100 | 2.5 |
| 3 | €55 | €100 | 1.82 |
The mechanism is obvious: in month 2, when the price falls to €40, the same €100 payment buys more shares (2.5) than in month 1 or month 3. This is the effect sought by the method—not a guarantee of profit, but an automatic adjustment of the number of shares purchased to the price variation. BUX also notes that such a plan is generally accessible starting from €10 per month, making it an option for small budgets.
Twelve Months at Saxo: When Whole Shares Complicate the Calculation
The second verifiable example, longer than the first, comes from broker Saxo (2023) and covers twelve months of a $1,000 monthly plan, totaling $12,000.
Over this period, the investor accumulates 126 shares for $11,993 actually invested—leaving $7 uninvested, carried forward to the next month. The resulting average purchase price is approximately $95.18 per share.
These figures are from Saxo's own example, expressed in its original currency; they serve here only to illustrate the mechanism, not as Belgian market data. For a Belgian investor investing in euros, buying shares denominated in dollars adds in practice an exposure to the EUR/USD exchange rate, a factor that the average purchase price calculation does not account for.
This $7 remainder is not a trivial detail: it stems from the fact that if the broker only buys whole shares, the unused balance after each purchase is automatically carried forward to the next month, Saxo notes.
A broker offering fractional shares would not have this remainder; depending on the broker and product, purchases can indeed involve whole shares or fractional shares.
Saxo also offers the inverse comparison: investing the same $12,000 all at once at a hypothetical price of $100 per share would have bought 120 shares—fewer than the 126 shares obtained through the monthly plan over this specific price path. DCA didn't "win" because it's inherently superior, but because the price, over this particular period, fell more than it rose.
DCA Versus Lump-Sum Investment: Who's Right?
This is where the two sources respond to each other, and sometimes appear to contradict. BUX, which commercializes this type of plan, nevertheless acknowledges a clear limitation: DCA protects against poor timing on entry, but not against a general decline in investment value. In other words, spreading purchases doesn't prevent losing money if the asset durably loses value.
Saxo goes further in caution and emphasizes that DCA guarantees neither a lower average purchase cost nor better returns than a lump-sum investment. The broker even notes that some studies have found that lump-sum investing has often outperformed DCA over certain historical periods, particularly when markets rise continuously.
These two positions don't really oppose each other: they describe the same mechanism from two angles. DCA results depend entirely on the price path followed by the market over the period in question. Falling prices or high fluctuations allow you to buy more units for the same budget; a market that rises steadily, by contrast, mechanically favors lump-sum investing, since each euro invested later buys fewer shares than an euro invested earlier. Neither approach is therefore superior in absolute terms—their relative effectiveness plays out after the fact, based on the actual trajectory followed by prices.
From Verified Mechanism to Ten Years: A Pedagogical Scenario, Not a Backtest
None of the sources consulted contains a ten-year numerical simulation: the only complete examples available cover ten months at BUX and twelve months at Saxo. What follows is therefore not real market data, but a scenario constructed to show how the formula—total amount invested divided by total number of shares—behaves mechanically over a long horizon, using the same logic as the two previous examples.
Imagine €150 monthly for ten years, totaling 120 payments, spanning three distinct market phases. During the first three years, the share price gradually declines from €50 to €30: each €150 payment then buys an increasing number of shares, exactly like month 2 in the BUX example. During the next three years, the price stagnates around €32: the rate of share accumulation remains stable, with no particular effect from the mechanism. In the final four years, the price rises from €32 to €55: each payment then buys proportionally fewer shares, like month 3 of that same example.
Over the full ten years, the total amount invested reaches €18,000. If this stylized price path allowed accumulating, for example, roughly 480 shares total, the average purchase price obtained by the formula would be €37.50—a purely illustrative figure, not a return projection. What emerges from this exercise is that the initial decline phase weighs more heavily in the final calculation than the later rise phase, simply because more shares were bought at lower prices. This is also why staying exposed as early as possible—investing part of your salary upon receipt rather than waiting for some signal—allows you to capture part of these downturns without trying to identify them in advance.
The Belgian Friction: Fees, Taxes, and Whole Shares
The DCA mechanism works the same way everywhere. What changes for a Belgian investor putting €100 or €150 aside each month is the friction cost associated with each payment.
At most Belgian brokers, trading fees weigh relatively heavier on small amounts, stock exchange taxes accumulate with each purchase, and many brokers don't offer fractional shares—unlike the theoretical example seen earlier, where 1.82 or 2.5 shares could be purchased easily.
BUX points out the same limitation: transaction fees become relatively higher if the broker charges for each order separately, which weighs more on small monthly amounts than on a single larger payment. A €100 monthly plan therefore bears, at identical per-order fees, a relative burden higher than a €1,000 single payment.
This friction doesn't render the method obsolete, however: it's justified precisely because income is received monthly and the strategy suits long-term investing best, not a one-time transaction. BUX also notes that DCA is built to smooth payments over time, not to achieve quick results—a behavioral argument more than a cost calculation, but one that matters in deciding to maintain a monthly plan despite per-order fees.
Frequently Asked Questions
What minimum amount to start such a plan? At BUX, a periodic investment plan is offered from €10 per month, making the mechanism accessible even to a limited budget.
Is DCA suitable for short-term return objectives? No: BUX considers that for short-term return objectives, DCA is less suitable than another strategy, the method being built to smooth payments over time, not to achieve quick results.
What products can a periodic plan apply to? According to Saxo, DCA can apply to ETFs, funds, or individual stocks, but the risk level varies greatly depending on the product chosen—the payment mechanism changes nothing about the nature of underlying risk.
How do you concretely automate payments? Automation happens through an application or platform that creates a recurring payment schedule, according to Saxo. At BUX, concretely, the investor chooses a monthly amount and an ETF or stock, then the platform automatically executes the investment on the chosen day, without manual intervention at each deadline.
One question remains that neither BUX nor Saxo settles, and that each Belgian investor must answer themselves: at what monthly amount do per-order fees and the lack of fractional shares start to undermine the benefit of regularity? The answer depends less on the mechanism than on the fee schedule of the broker chosen.
--- This article is published for informational purposes only and does not constitute investment advice. Consult a licensed financial advisor before making any investment decision.
