Dollar-Cost Averaging vs Lump Sum Calculator
Compare investing a lump sum all at once against dollar-cost averaging it in over time, and see which comes out ahead.
How it's calculated
When you have a lump sum to invest, a windfall or a rollover, you can put it in all at once or spread it out in equal chunks, which is dollar-cost averaging. Investing now puts every dollar to work immediately. Averaging keeps some in cash for a while, earning a lower rate, to smooth out your entry price.
Take the default. Investing $60,000 in the market at an expected 8 percent, against spreading it over 12 months while the waiting cash earns 4 percent. Invested all at once, it grows to about $64,980. Averaged in over the year, it reaches about $63,810. Investing now wins by roughly $1,170, because the money spends more time in the higher-returning market.
That is the usual result. Since markets rise more often than they fall, a lump sum invested now beats averaging most of the time. The case for averaging is not returns, it is regret. If you would be crushed by investing right before a drop, spreading it out limits that risk and makes it easier to actually invest. The math favors now, but the behavior that keeps you invested matters more.
Assumptions
- The lump sum is fully invested from the start. Averaging invests an equal amount each month, with the waiting cash earning the cash rate.
- Uses steady returns for both the market and cash. Real markets vary, which is the risk averaging is meant to soften.
Last updated: 2026-08-08
These assumptions follow our general methodology.
Frequently asked questions
Is it better to invest a lump sum or dollar-cost average?
On the numbers, investing the lump sum now usually wins, because markets rise more often than they fall and your money spends more time invested. Averaging tends to lag, but it lowers the risk of a bad entry and can make investing feel safer.
What is dollar-cost averaging?
Investing a fixed amount on a regular schedule instead of all at once. It buys more shares when prices are low and fewer when high, smoothing your average cost. It is the natural way to invest from a paycheck, and a choice when deploying a lump sum.
Why does the lump sum usually win?
Because the market has historically gone up more often than down. Money invested now captures more of that rise, while averaging leaves part of your cash on the sidelines earning less. The gap is the return you give up by waiting.
When does averaging make more sense?
When avoiding regret matters more than squeezing out the last bit of return. If investing a large sum all at once would keep you up at night, or stop you investing at all, spreading it over a few months is a reasonable trade.