trovetool
FinanceFreeUS ETF

Stock DCA simulator

Simulate monthly DCA into US ETFs like SCHD, VOO, or QQQ. Toggle dividend reinvestment and see long-term results. US 15% withholding tax included.

Inputs

ETF preset
Final value
$260,463
₩4.03억
Total invested
$120,000
₩1.86억
Unrealized gain
$140,463
Return 117.1% · ₩2.17억
Reinvestment effect
+$0
vs no-reinvest difference

Annual value (USD)

ValueInvestedNo reinvest
⚡ As of 21:24 (15–20 min delay)

How dollar-cost averaging into ETFs is calculated

Dollar-cost averaging (DCA) means buying the same amount every month to smooth out your average cost. This tool simulates monthly contributions into US ETFs like SCHD, VOO, QQQ, and VT, combining price growth with dividend reinvestment and reflecting US dividend withholding. Below we walk through the mechanics, a real example, the tax context for Korean investors, and the common misconceptions.

How DCA works — buying fractional shares at each month's price

This calculator divides your monthly dollar amount by that month's share price and adds even fractional shares to your holdings. The price compounds monthly from a starting value using your annual growth rate divided by 12, and your value equals shares × price. Dividends accrue each month as 'shares × price × (yield ÷ 12).' The key is that contributing the same amount every month buys more shares when prices are low and fewer when high, naturally smoothing your average cost. Since this is a growth-rate model rather than absolute prices, it's best for seeing the effect of contribution size and time horizon rather than stock picking.

A real example — $500/month, 9% annual, 10 years (reinvested)

Assume VOO: $500 every month at 9% growth and a 1.4% yield for 10 years. Total contributed is $500 × 120 months = $60,000, but with price growth and dividend reinvestment the value swells to roughly $98,000. Most of the gap is compound growth, and with dividends set to reinvest, after-tax dividends buy more shares, snowballing your share count. Turning reinvestment off in the same scenario lets dividends pile up as cash and slows value growth. Comparing a high-growth, low-yield name like QQQ (12% / 0.6%) with a high-yield name like SCHD (3.6%) makes the strategic differences clear. Extending the horizon from 10 to 20 years shows the compounding accelerating sharply in the later years on the curve, letting you feel the 'the longer you hold, the better' principle in concrete numbers.

Tax context for Korean investors — 15% dividend withholding and FX

US ETF distributions are withheld 15% locally (under the Korea-US tax treaty). This calculator deducts that 15% from each month's dividend first, then — if reinvestment is on — buys more shares with the after-tax amount, or accumulates after-tax cash if off. Withheld dividends generally carry no extra Korean dividend tax, but if your financial income (interest + dividends) exceeds ₩20M per year, it may become subject to global taxation, aggregated with other income at a higher rate. Note that sale gains are outside this calculator's scope: overseas ETFs incur a separate 22% capital gains tax after a ₩2.5M deduction, so check that with the capital gains tax calculator. Contributing through tax-advantaged accounts like an ISA or pension savings can defer or reduce tax on distributions and sale gains, so the same contribution can yield a different real return depending on the account. All amounts are converted to KRW at the rate you enter.

Common mistakes and tips

The most common misconception is treating this tool's growth rate as a guaranteed future return. The preset growth and yield figures are simplified assumptions of past trends; real markets fluctuate yearly and bear markets happen. Second is underestimating dividend reinvestment — over long horizons, the compounding from reinvested dividends becomes a large share of total return, so reinvesting is advantageous unless you need the cash. Third is forgetting FX risk: if the won-dollar rate falls, your KRW return can shrink even with a good dollar value. DCA's real power comes from 'staying consistent rather than timing the market,' so the discipline of not pausing contributions over a month or two of market noise matters most.

FAQ

What exactly is DCA (dollar-cost averaging)?

Dollar-Cost Averaging — investing a fixed amount every month regardless of market conditions. You buy more shares when prices are low and fewer when high, automatically lowering your average cost. Instead of trying to time the market, you spread your entry points over time to reduce volatility risk. It's the most practical approach for salaried investors deploying part of each paycheck.

Is the dividend yield based on real data?

Yes — the yield comes from Yahoo Finance's trailing 12-month actual distributions, refreshed every 5 minutes. A ⚡ icon on a preset button means live data is applied. However, the price growth rates (SCHD 7% / VOO 9% / QQQ 12%) are assumptions based on long-term historical averages and do not guarantee future returns. Actual results can vary widely with market conditions, interest rates, and FX.

How big is the reinvestment effect (ON vs OFF)?

For high-yield ETFs like SCHD, reinvestment can account for 30–40% of the final portfolio value over 25–30 years. Buying more shares with received dividends creates a compounding loop where those new shares also pay dividends. On the chart, the gap between the solid 'reinvest' line and the dashed 'cash' line shows exactly this effect. In the accumulation phase, reinvest ON is the key to maximizing long-term returns.

How is the 15% US dividend withholding applied?

Under the Korea-US tax treaty, the US IRS automatically withholds 15% from US ETF distributions. This calculator reinvests or accumulates only the after-tax dividend (less 15%) each month. Note that Korean residents may owe additional Korean dividend tax beyond this 15%, and if annual financial income exceeds ₩20M it becomes subject to comprehensive taxation. The 22% capital gains tax on sales is separate.

What exchange rate timing is used?

For simplicity, the same exchange rate is assumed throughout the period to convert USD results into KRW. In reality, the difference between your buy-time and sell-time FX is a separate variable that strongly affects the final KRW return. A strong dollar at sale lifts your KRW return even with a flat price; a weak dollar lowers it. Long-term DCA investors usually treat FX as part of diversification rather than converting all at once.

Can I simulate Korean ETFs (e.g. KODEX)?

The presets focus on US ETFs, but you can simulate Korean ETFs by setting FX to 1 and withholding to 0 and entering your own values. Note that Korea-listed ETFs withhold 15.4% on distributions (except domestic equity ETFs), so enter 15.4 in the withholding field to match. Korea-listed foreign ETFs treat trading gains as dividend income too — 15.4% or comprehensive taxation — so the tax differs from direct US investing.

Is DCA always better than lump-sum investing?

No. Statistically, assuming markets rise over the long run, investing spare capital all at once (lump-sum) beat DCA in roughly two-thirds of historical periods. But most salaried investors don't have a lump sum — they invest part of each monthly paycheck, so DCA is the only realistic option. DCA's real value is spreading 'buying at the top' risk over time, which psychologically helps you keep investing consistently.

What price growth rate should I enter?

There's no single right answer, but being conservative is safer. The US S&P 500's average annual nominal return since 1957 is roughly 10% with dividends, about 7% real after inflation. Nasdaq-100 (QQQ) has been more volatile with higher long-term averages but deeper drawdowns. The presets (SCHD 7% / VOO 9% / QQQ 12%) are historical averages — don't assume the future is rosy; also compare conservative scenarios like 6–8%.

How much per month and for how long should I invest?

Consistency and duration matter more than the amount. Compounding grows non-linearly with time, so starting early with a small amount often beats starting late with more. For example, ₩500K/month at 8% for 30 years turns ₩180M of principal into over ₩700M. Use this calculator to vary amount, period, and return until you find a combination that fits your goal — retirement, a home down payment, and so on.

Is dividend reinvestment automatic, or do I do it myself?

Most Korean brokers don't support automatic dividend reinvestment (DRIP) for US stocks, so you must manually rebuy with received dividends. Some brokers offer an 'auto-reinvest' service, but it's limited by ticker and account type. To do it manually, buy whenever dividends arrive or fold them into your regular monthly purchase. Using Korea-listed foreign ETFs or ISA/pension accounts can reduce the tax drag during reinvestment.

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This calculator is for informational purposes only. Actual US ETF performance, exchange rates, and taxes vary significantly by timing and individual circumstances. Consult a tax advisor or financial professional for important decisions.