i What this calculator does
Rand cost averaging means contributing a fixed amount at regular intervals rather than investing everything at once. The fixed rand amount buys more units when prices are low and fewer when they are high, which lowers the average cost paid.
It is not a way to earn a higher return. On average, over long periods, a lump sum invested earlier outperforms because it is exposed for longer. What averaging buys is a smaller worst case and a plan that survives a falling market.
This calculator is for educational purposes only. Results are estimates and may vary depending on market conditions, spreads, commissions, platform settings, and exchange rates. It should not be considered financial advice.
How to use the Rand Cost Averaging Calculator
Every field has a working default, so the calculator produces a result the moment the page loads. Replace the defaults with your own figures and the output updates when you press the button.
- 1. Total Amount to Invest (R)
- 2. Number of Monthly Contributions
- 3. Starting Unit Price (R)
- 4. Annual Price Trend (%)
- 5. Annual Volatility (%) Higher volatility favours averaging
- 6. Brokerage Per Trade (R)
The result panel reports:
- ' + h.label + '
Alongside the headline figures, the calculator reports monthly contribution, average price paid, simple average price, total brokerage. Those are the numbers that usually explain why the headline result came out where it did.
The breakdown below the result shows every step of the arithmetic, so you can check the figure rather than trust it. The formula panel names each input as it is used, which is useful if you want to reproduce the calculation in a spreadsheet.
Frequently asked questions
Does rand cost averaging beat investing a lump sum?
Usually not, on average. Markets rise more often than they fall, so money invested earlier is exposed for longer and tends to do better. What averaging reduces is the worst case: the risk of committing everything immediately before a fall.
Then why do it?
Two reasons. Most people do not have a lump sum, they have a monthly salary, so averaging is simply what investing looks like. And for those who do have a lump sum, it makes a large decision psychologically survivable, which matters if the alternative is not investing at all.
Does brokerage make small contributions inefficient?
It can. A R20 fee on a R500 contribution is 4% before anything is invested. Where fees are fixed, larger and less frequent contributions cost proportionally less. Several South African platforms charge a percentage instead, which removes the problem.
How does volatility affect the result?
Higher volatility favours averaging, because the fixed rand amount buys disproportionately more units at the low points. In a smoothly rising market averaging simply pays progressively higher prices.
Is this the same as dollar cost averaging?
The same idea with a different currency. The rand version is worth naming separately because South African investors often hold both local and offshore assets, and the exchange rate adds a second source of variation to the offshore side.
Should I stop contributing when the market falls?
That reverses the mechanism. The low prices are when the fixed amount buys the most units, which is where the benefit comes from. Stopping during a fall and resuming after a recovery is the most common way the approach is undone.
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