Lump Sum vs. Dollar-Cost Averaging Calculator
Compare investing all at once versus spreading it out over time.
Open the Interactive CalculatorHow It's Calculated
Under a constant assumed return, Lump Sum = Amount × (1+r)n. Dollar-Cost Averaging sums each smaller monthly contribution compounded only for the months it has left to grow, so money invested later has less time to compound.
Example
Example: $50,000 invested over 10 years at 7% annually. Investing it all today grows to about $100,480. Spreading it in over 12 months instead grows to about $97,340 — roughly $3,140 less, simply because part of the money started compounding later.
Frequently Asked Questions
Does lump sum always win in real life, not just in this calculator?
This model assumes a smooth, constant return, so lump sum always wins by having more time in the market. Real markets are volatile — if prices fall during your averaging period, DCA can sometimes outperform. Historically, lump sum has outperformed DCA in most rolling periods, but not all.
Why would someone choose DCA if it usually underperforms?
DCA reduces the regret and anxiety of investing a large sum right before a downturn, and spreads out entry prices. For many investors, that peace of mind is worth a small expected-return trade-off.