For many investors, the scariest moment is a market crash. The instinct is to sell or stop investing. But proponents of dollar-cost averaging (DCA) argue that downturns are actually the best times to buy. Is this true? We used our backtesting tool to analyze an investor who started a $1,000 monthly investment right before the 2008 financial crisis and held on.

The interactive result below shows this investor's journey with the S&P 500 (SPY). Use the toggle to compare it against a more volatile, high-growth stock like NVIDIA (NVDA) during the same turbulent period.

Turning Fear into Astonishing Opportunity

The numbers from this stress test are a powerful testament to the DCA strategy:

S&P 500 (SPY): A total investment of $222,000 through multiple market crises, including 2008 and 2020, grew to an impressive $861,420.
NVIDIA (NVDA): The same investment in a high-conviction tech stock yielded an almost unbelievable result, growing to over $50.5 million.

By continuing to buy at lower prices during the crash, an investor significantly lowers their average cost per share. When the market eventually recovered, the returns were amplified dramatically. This simulation proves that a consistent dollar-cost averaging strategy turns periods of market fear into incredible buying opportunities.

Conclusion: Discipline Forges Diamonds

This backtest demonstrates a core principle of DCA: it removes emotion from the equation. While NVIDIA's result is an outlier, the strong performance of the S&P 500 shows that the strategy's true strength is revealed not when the market is climbing, but when a disciplined investor continues to buy when others are fearful.

Curious about other periods of volatility? Run your own stress test on the calculator →