DCA vs Lump Sum Calculator
You have a sum of money. Invest it all today, or spread it out? Same budget, same time, side by side — see the exact difference.
With $60,000 and a constant 7% annual return over 10 years, investing everything today (lump sum) could grow to about $120,580, while spreading it out monthly (DCA) would reach about $86,542 — a difference of roughly $34,037. Lump sum wins in this constant-return model because every dollar spends more time in the market. In reality, dollar-cost averaging reduces the risk of investing right before a downturn. Adjust the budget below to compare both strategies.
Your budget
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Illustrative assumptions only. Adjust the rate for your own model.
DCA spread: $500/month over the full period.
Dollar-cost averaging
Lump sum
Show yearly breakdown
| Year | Contributions | DCA | Lump Sum |
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How this comparison works
The model
Both paths invest the same total over the same period at the same annual return. Lump Sum invests everything on day one. DCA invests an equal amount each month:
DCA: FV = M · ( ((1+i)N − 1) / i ), M = T / N
T = total to invest · M = monthly amount · i = monthly rate · N = number of months.
Important limits of this model
- Assumes a constant annual return — no volatility, no crashes, no sequence-of-returns risk.
- Does not include taxes, inflation, fees or dividend timing.
- With any positive constant return, Lump Sum mathematically always wins, because every dollar is invested longer.
- In real markets DCA's value is risk reduction, not higher expected return. This tool shows the pure math, not a recommendation.
Educational purposes only. Not financial advice. See the full methodology and disclaimer.
How it played out in real markets (1928–2026)
The constant-return model above isolates the pure math. Here’s what actually happened to your money as a lump sum versus the same total invested monthly, across every real market window since 1928.
Backtest settings
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Lump sum invests the full amount on day one. DCA invests the same total at the end of every month.
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| Started | Lump sum | DCA | Winner |
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Method. Every calendar-year window between 1928 and the most recent complete period is tested. Lump sum puts the full amount in at the start and compounds through each year’s return. DCA invests the same total in equal monthly installments at month-end, compounding through each year’s monthly-equivalent return. Annual returns are S&P 500 price returns (dividends not reinvested), so real total returns would be higher. Data: S&P 500 annual returns, 1928–2026, via History of Market / S&P Dow Jones Indices.
What this shows. Lump sum usually wins on average because money spends more time in the market. But DCA wins after the worst starts — like 1928–30, when investing everything right before the crash lost money. DCA reduces the risk of investing a lump sum just before a downturn: it’s a risk trade-off, not a return-maximizing trick.