Dollar-Cost Averaging Calculator
You have money to invest — all at once, or spread out monthly? This calculator compares a lump sum against dollar-cost averaging the same total over the same period.
How to use this calculator
- Enter lump sum available.
- Enter monthly amount to invest instead.
- Enter how long you will hold.
- Enter expected annual return.
- Your results appear instantly below and update as you change the numbers.
How this calculator works
The lump sum grows for the full period at your expected return. The monthly plan invests the same total in equal installments, so each dollar compounds for a shorter time. The difference shows the expected cost of spreading your entry — the price you pay for the psychological comfort of averaging in.
Frequently asked questions
Which strategy wins on average?
Lump sum investing wins roughly two-thirds of the time when markets trend up, because time in the market beats timing the market. Studies of the data consistently find that investing everything immediately produces a higher expected ending value than spreading it out.
When does dollar-cost averaging make sense?
When you might panic and sell after a drop, or when the money arrives as income rather than as one windfall. It smooths your entry price and makes regular investing automatic — many people find consistency worth more than the small expected edge of lump sum.
Does this account for dividends or taxes?
No — it assumes your expected return is net of whatever fees and taxes apply, which is a reasonable simplification for a comparison. Reinvested dividends are implicitly included if your expected return is a total return.
Disclaimer: Results are estimates for general information only and do not constitute financial, tax, or legal advice. Figures reflect 2026 rules and may change. Always confirm current limits and consult a qualified professional before making decisions. Official figures: IRS.gov · 2026 limits per IRS tax inflation adjustments.