Compare investing a lump sum immediately against spreading it over several months.
Spreading a lump sum leaves the average unit of money out of the market for roughly half the spread period. At a positive expected return that delay has a definite cost, which is why lump sum wins on average. Averaging in is a behavioural strategy rather than a mathematical one: it reduces regret and sequence risk at a measurable expected cost.
Lump Sum vs DCA
Averaging delays the average unit of money by (months − 1) ÷ 2, costing that much compounding
Averaging delays the average unit of money by (months − 1) ÷ 2, costing that much compounding Spreading a lump sum leaves the average unit of money out of the market for roughly half the spread period. At a positive expected return that delay has a definite cost, which is why lump sum wins on average.
Averaging in is a behavioural strategy rather than a mathematical one: it reduces regret and sequence risk at a measurable expected cost.
This calculator takes 4 inputs: Amount available to invest, Months over which to spread, Expected annual return, Investment horizon. The pre-filled defaults are a realistic starting point — replace them with figures from your own environment for a result you can act on.