Compare lump sum investing vs regular periodic investments
Dollar Cost Averaging is an investment strategy where you invest a fixed amount of money at regular intervals, regardless of the asset's price.
Example: Instead of investing $12,000 all at once, you invest $1,000 per month for 12 months.
• Reduces Timing Risk: You don't need to guess the perfect entry point
• Emotional Discipline: Automates investing, removes emotion from decisions
• Buy More When Low: Fixed dollar amount buys more shares when prices drop
• Beginner Friendly: Simple strategy that doesn't require market expertise
• Flexible Commitment: Start small and increase over time
• Lower Returns in Bull Markets: Lump sum typically outperforms when markets rise consistently
• More Transaction Fees: Multiple purchases can mean more fees (use commission-free brokers)
• Cash Drag: Uninvested cash earns little while waiting to be deployed
• Not Optimal Statistically: Studies show lump sum wins ~66% of the time historically
Use Lump Sum If:
• You have a large sum available now (inheritance, bonus, etc.)
• You have a long time horizon (10+ years)
• You can handle short-term volatility emotionally
• Historical data favors this approach
Use DCA If:
• You're investing from regular income (salary, business revenue)
• You're worried about market timing and want to reduce regret
• You're new to investing and want to ease in gradually
• You value emotional comfort over statistical optimization
Many investors use a hybrid strategy:
1. Invest a portion immediately (50-80%)
2. DCA the remainder over 3-6 months
3. Continue regular monthly contributions from income
This balances statistical advantage with psychological comfort.
• This calculator uses simulated returns with random volatility - real markets may differ
• Past performance does not guarantee future results
• Both strategies assume you stay invested for the full period
• Results vary based on market conditions during your specific timeframe
• This is for educational purposes only - not investment advice