Lump sum vs DCA calculator guide
This calculator compares investing available cash immediately with spreading the same cash across a dollar-cost averaging schedule.
How to use it
- Enter the cash currently available for investment.
- Choose how many months you would spread the DCA purchases over.
- Add any ongoing monthly contribution.
- Set a long-term return assumption and investment horizon.
Calculation method
Lump sum invests available cash at month 0; DCA invests equal slices over the selected months
Both scenarios include the same ongoing monthly contribution. The difference is only how quickly the initial cash is invested.
Example scenario
With positive expected returns, lump sum investing often has a higher expected final value because more money is invested earlier. DCA can still be useful when emotional comfort and timing risk matter.
FAQ
Does this predict which strategy will win?
No. It shows a model based on a steady return assumption. Real markets are volatile.
Why would someone choose DCA?
DCA can reduce regret and timing anxiety when investing a large amount.
Is this the same as monthly investing?
No. This calculator compares how to deploy existing cash, while also allowing regular monthly contributions.