Calculators / DCA vs Lump Sum
DCA vs Lump Sum
You have a windfall: an inheritance, a bonus, proceeds from a sale. Do you invest it all at once (lump sum), or spread it out over several months (dollar-cost averaging)? This runs 2,000 market paths to compare the two on the exact same markets, so the comparison is fair. Everything runs in your browser.
Lump sum invests everything on day one. DCA drips the same total in equal instalments at the start of each month for the number of months you set; the uninvested cash earns nothing while it waits. Both strategies then ride the identical simulated market.
Lump sum, median · DCA, median
the range 8 in 10 lump-sum paths landed in
How this works
For each of 2,000 simulated markets we draw one series of monthly returns from a lognormal distribution calibrated to your expected return and volatility. Both strategies are run on that same return series, so the only thing that differs is when the money went in.
Lump sum: the whole amount is invested at month zero and compounds for the full horizon. DCA: an equal slice is invested at the start of each of the first months you chose; cash waiting to be invested earns nothing, then each invested dollar rides the same market as the lump sum.
Why lump sum comes out ahead more often: markets rise on average, so the money you hold back as cash misses growth it would otherwise have captured. DCA still has a place. It lowers your exposure to the worst possible timing and, for most people, is easier to actually go through with. Constant expected return and volatility, monthly compounding; illustrative, not advice.
Illustration only. Accuracy not guaranteed. A simplified model for education, not financial advice and not a recommendation to invest all at once or spread it out. See the disclaimer.