DCA vs Lump Sum Calculator
You have $50,000 (or any amount). Invest it all today, or spread it over 6, 12, or 24 months? This tool shows the expected dollar difference under a steady-growth assumption — and why that assumption matters.
How the math works
Lump sum: the full amount compounds at the market return for the whole horizon.
DCA: the amount is split into equal monthly tranches. Each tranche compounds at the market return only from its investment month onward; uninvested cash earns the APY on idle cash. This is a deterministic model — real markets are volatile, and DCA's real-world variance is lower than lump sum's even when its expected value is lower.
Who this tool is for / not for
Use it if you…
- Came into cash (sale, bonus, inheritance) and are frozen by timing anxiety
- Want to put a number on the "sleep-at-night premium" of spreading entries
- Are deciding between a 3-month and a 12-month entry plan
Skip it if you…
- Want a prediction of whether the market will crash — nobody's tool does that
- Expect DCA to "beat" lump sum — in expectation it can't in a rising market
- Are investing regular monthly salary anyway (that's just lump sum per paycheck)
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Try TradingView free →FAQ
Doesn't DCA protect me from a crash?
It reduces the worst-case regret of investing everything the day before a crash — but in a crash DCA still loses money on every tranche as it enters. What DCA really buys is lower variance, not protection.
What did the famous Vanguard study find?
Vanguard's research (US, UK, Australia markets) found lump sum beat DCA roughly 60–70% of the time across historical periods, with an average benefit near 1.5–2.4% of the invested amount. The gap grows with longer DCA periods and higher expected returns.
Why does idle-cash APY matter?
During 2023–2026, money market funds paid ~4–5%. Half your DCA "cost" is offset by interest on the not-yet-invested cash. A 0% APY assumption overstates the penalty for waiting.