Lump Sum vs DCA

If you have a large amount to invest, you can put it all in today (lump sum) or spread it over several months (DCA). In a steadily rising market a lump sum usually earns more because your money is in the market longer. DCA lowers timing risk and the emotional pressure of investing everything at one price.

DCA means investing a fixed amount at regular intervals (e.g. monthly). You buy more units when prices are low and fewer when they are high, which averages out your cost and reduces the risk of putting everything in at the "wrong" moment.

Vanguard's well-known study found that lump-sum investing beat DCA about two-thirds of the time over the long run, because markets rise more often than they fall and money invested earlier compounds longer. But that is an average - if the market drops right after you invest, DCA protects you. This calculator compares both with your own assumptions.

While you DCA, the money not yet invested does not sit idle - it can earn interest in a savings or money-market account. A fair comparison must count that. This tool lets you set a cash yield; if the expected market return is low and the cash yield high, DCA can even come out ahead.

The tool also shows the real (inflation-adjusted) value of both strategies, so you see your true purchasing power. The proportional gap between the two is the same in real and nominal terms, but the real figure gives the honest picture.

Yes. Alvest tracks recurring (DCA) contributions, your real cost basis and the real return of your portfolio automatically, and projects it toward your goals. You can start free.