Question 1

What is the compound interest formula?

Accepted Answer

Compound interest formula: FV = PV×(1+r)^n + PMT×[(1+r)^n-1]/r, where PV is the initial investment, r is the monthly rate, n is the number of periods, and PMT is the monthly DCA amount.

Question 2

What is a good DCA return rate?

Accepted Answer

A long-term DCA annualized return of 8%-12% is a relatively ideal target. Index funds average about 8%-10% annualized over the long term.

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