Lump Sum vs Dollar-Cost Averaging Calculator

The math favors lump sum — usually

Markets rise more often than they fall (roughly 2 of every 3 years historically), so money invested sooner has better expected returns. Vanguard's well-known study found lump-sum beat 12-month DCA about 68% of the time. The calculator shows the expected gap: on $50,000 at 8% vs 4% cash, spreading over a year costs about $1,900 of expected value over a decade.

Why smart people still DCA

Lump sum maximizes expected value; DCA minimizes maximum regret

• The 32% case hurts more than the 68% case helps: investing $50,000 the week before a crash does psychological damage that causes panic-selling — the actual wealth killer.
• DCA is a commitment device: people who plan to "wait for a dip" wait forever. A scheduled 6-month DCA gets fully invested; a hesitant lump-sum plan often never does.
• Reasonable compromise: half now, half over 6 months captures most of the expected value and most of the regret protection.

Note: investing part of each paycheck is not really DCA — it is investing money as it arrives, which is just… correct. The lump-sum question only exists for windfalls.