Lump Sum vs. Dollar-Cost Averaging
When you have a large sum to invest, you can put it in all at once or feed it in gradually. Slide the amount, the number of months to spread it over, and the return to compare both outcomes. The result shows the tension between higher expected growth and lower timing risk.
How this math works
We invest the full amount immediately and compound it at your chosen return, then compare that to spreading the same money in equal monthly pieces over the period you set, with each piece compounding from the date it goes in. Both paths use the same return so the only difference is timing.
On average the lump sum comes out ahead, because more of your money is invested for more time and markets tend to rise over the long run. Spreading the money in trades a little expected growth for protection against the bad luck of investing everything right before a downturn.
Common questions
Which approach makes more on average?
Investing the lump sum tends to win on average, since markets rise more often than they fall and your money spends more time invested. The edge is real but not guaranteed in any single stretch.
Why would I dollar-cost average?
Spreading your investment reduces the risk of putting everything in just before a drop, and it can be easier emotionally. You give up some expected return in exchange for steadier, lower-regret entry.
Does this include fees or taxes?
No. The comparison assumes the same return with no transaction costs or taxes, so real results will differ. Use it to understand the timing trade-off rather than as an exact forecast.
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