📅Investment Strategy Comparison

Dollar-Cost Averaging Calculator

Compare lump sum investing vs dollar-cost averaging (DCA) to see which strategy works best in different market conditions

Investment Settings

Lump Sum

💰
£0
Initial investment: £10,000
-100.00%

Dollar-Cost Avg

📅
£0
Total invested: £6,000
-100.00%
Winner in this simulation
DCA
Outperformed by £0
🎯

Performance Comparison

✓ Lump Sum Wins When:

  • • Markets trend upward
  • • Low volatility
  • • Time in market matters most

✓ DCA Wins When:

  • • Markets decline initially
  • • High volatility
  • • Buying dips consistently

💡 Best Approach:

  • • Lump sum if available
  • • DCA for regular income
  • • Combine both strategies

Lump Sum vs Dollar-Cost Averaging

What is Dollar-Cost Averaging?

Dollar-cost averaging (DCA) is an investment strategy where you invest a fixed amount at regular intervals (weekly, monthly) regardless of the asset's price. This contrasts with lump sum investing, where you invest all your money at once.

The Research Says...

Studies show that lump sum investing outperforms DCA about 66% of the time historically. However, DCA can reduce the emotional stress of timing the market and helps if you don't have a lump sum available.

When to Use Each Strategy

Use Lump Sum If:

  • • You have a large sum available (inheritance, bonus, sale)
  • • You can emotionally handle short-term volatility
  • • You have a long investment horizon (10+ years)

Use DCA If:

  • • You receive regular income (salary) to invest
  • • You're uncomfortable investing a lump sum at once
  • • You want to reduce timing risk and emotional stress