Lump Sum vs DCA Calculator

Compare investing a lump sum immediately against spreading it over several months.

About Lump Sum vs DCA Calculator

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.

Formula

Lump Sum vs DCA

Averaging delays the average unit of money by (months − 1) ÷ 2, costing that much compounding

average delay: Mean time each unit of money sits uninvested under an averaging schedule

Worked example

With the default values below, Lump Sum vs DCA Calculator returns Lump Sum Advantage at the Horizon of $4,779.14. Change any input above and every figure here is recalculated in your browser.

Inputs used

Amount available to investminimum 0: 60,000
Months over which to spreadaccepts 1–60 months: 12 months
Expected annual returnaccepts -30–60 %: 8 %
Investment horizonaccepts 1–50 years: 10 years

Results

Lump Sum Advantage at the Horizon: $4,779.14
Lump Sum Final Value: $133,178.41
Dollar-Cost Averaging Final Value: $128,399.27
Lump Sum Advantage: 3.722%
Average Time Out of Market Under Averaging: 5.5

Step by step

1Values used
2Lump Sum vs DCA
3Lump Sum Advantage at the Horizon= 4,779.14
4Lump Sum Final Value= 133,178.41
5Dollar-Cost Averaging Final Value= 128,399.27
6Lump Sum Advantage= 3.722
7Average Time Out of Market Under Averaging= 5.5

Assumptions and limits

The result is derived only from the 4 inputs listed above. Anything not among them is not part of the calculation.
In particular, this calculator does not take inflation, tax or fees or charges into account.
Figures are rounded for display to 3 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.
This is an estimate for general information and not professional financial, tax or legal advice. See the full disclaimer for the limits that apply to this kind of calculator.

How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.

Frequently Asked Questions

How is Lump Sum vs DCA calculated?

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.

Why does Lump Sum vs DCA matter?

Averaging in is a behavioural strategy rather than a mathematical one: it reduces regret and sequence risk at a measurable expected cost.

What values do I need to enter?

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.