DCA vs Lump Sum Calculator
Should you invest all at once or spread it out.
Lump sum advantage
$5,139
3.69% more than DCA, assuming a steady return
Lump sum ending value
$144,232
DCA ending value
$139,093
With a positive expected return, lump sum wins on average because money is in the market longer. DCA's value is risk reduction, not higher return.
About
Vanguard's research found lump sum beats dollar-cost averaging about two-thirds of the time, since markets go up more often than down. This calculator runs both strategies on your scenario and shows the expected gap.
How to use
- Enter the amount to invest.
- Pick the DCA period (3, 6, 12, 24 months).
- Set the expected annual return.
- See the projected gap between strategies.
FAQ
Why does lump sum usually win?+
Time in the market beats timing the market. By spreading purchases, DCA holds cash longer, and cash earns less than stocks on average.
When does DCA win?+
When markets fall during the DCA window. It also wins on regret minimization for nervous investors. The math says lump sum, the psychology often says DCA.