Dollar Cost Averaging Calculator
Simulate a DCA investment strategy. Compare dollar cost averaging vs lump sum investing over time.
Optional starting balance for DCA comparison
DCA Final Value
$92,082.84
Lump Sum Final Value
$133,178.41
Lump Sum wins by
$41,095.57
Dollar cost averaging (DCA) is the practice of investing a fixed amount of money at regular intervals, regardless of what the market is doing. Instead of investing a large sum all at once, you spread your investments over time — for example, investing $500 every month into an index fund.
DCA vs Lump Sum: What the Data Shows
Research consistently shows that lump sum investing outperforms DCA about two-thirds of the time. This is because markets tend to rise over time, so having your money invested sooner means more time for compound growth. A Vanguard study found that lump sum investing beat DCA by about 2.3% on average over 12-month periods across US, UK, and Australian markets.
However, this does not mean DCA is a bad strategy. DCA reduces the risk of investing at a market peak, which can provide peace of mind. And for most people, DCA is not a choice but a necessity — you invest from each paycheck because that is when the money becomes available.
When DCA Makes Sense
- You receive income periodically and invest from each paycheck
- You have a large sum but are anxious about market timing
- You want to build a disciplined, automatic investing habit
- You are investing in a volatile asset and want to reduce timing risk
How This Calculator Works
This calculator models DCA by investing your chosen amount at the selected frequency, with the portfolio growing at the expected annual return rate (compounded each period). The lump sum comparison invests the entire total amount (monthly investment x number of periods + initial lump sum) on day one and lets it compound at the same rate. This isolates the pure timing effect of DCA vs lump sum.