DCA vs Lump Sum Calculator
Backtest dollar-cost averaging against investing it all at once — using real S&P 500 and S&P/TSX Composite daily closes, not assumed return curves. Pick an amount, a start year, and a schedule; see who actually won.
The 2-in-3 stat, and why DCA still wins the behavioral game
Start with the honest headline number: research on lump-sum versus dollar-cost-averaging, most famously Vanguard's study of rolling historical periods across the US, UK, and Australian markets, found that investing a windfall all at once beat spreading it out over 6-12 months roughly two times out of three. The mechanism isn't subtle — equity markets go up more years than they go down, so money that's in the market sooner simply has more time exposed to that upward drift. Our companion article,Lump Sum vs. Dollar-Cost Averaging, digs into that framing and the reasoning behind it in more depth than fits on a calculator page.
And yet dollar-cost averaging remains the default advice most people actually get, and for a reason that has nothing to do with expected value: it's easier to live with. Investing a lump sum right before a drawdown means staring at a meaningful loss on day one, in full, with nothing to soften it — exactly the kind of experience that causes people to sell at the bottom, abandon the plan, or simply never invest the windfall at all out of fear of bad timing. DCA trades some expected return for a smoother emotional ride: if the market drops after your first tranche, your later tranches buy in cheaper, which feels like the plan working rather than failing. A strategy you can actually stick with beats a theoretically optimal one you abandon at the worst possible moment — which is why "DCA is usually behaviorally correct even when it's not usually mathematically optimal" is a genuinely defensible position, not a consolation prize.
This tool uses real index history — not assumed return curves
Most DCA-vs-lump-sum content on the internet, including a lot of otherwise good financial writing, makes its case with a smoothed hypothetical return curve — "assume the market returns 8% a year" — and then does algebra on top of that assumption. That's a fine way to illustrate the mechanism, but it can't show you the thing that actually determines the answer in any real period: the exact shape and timing of the path prices took, week by week, between your start date and today. A market that goes straight up rewards getting in early. A market that crashes early and recovers late rewards averaging in. A market that chops sideways for years barely distinguishes between the two. No smoothed curve captures any of that — only the real daily closes do.
So this calculator doesn't assume a return curve at all. Every run fetches real daily closing prices for the S&P 500 (^GSPC) or the S&P/TSX Composite (^GSPTSE) from Yahoo Finance, going back to your chosen start year, and computes both strategies directly against those closes: the lump sum buys everything at the first close on or after your start date; the DCA plan splits your amount into equal tranches, buying the first tranche on that same day and each subsequent tranche at the first close of each following month; both are marked at the single most recent close available, so the comparison always reflects where things actually stand as of today, not as of some arbitrary historical "end date." That's the differentiator this whole tool exists for — it's the only calculator on this site connected to live market data instead of a set of assumed rates.
A worked example: 2020, the crash-year exception
Run the first starter link above — $10,000, starting January 2020, DCA'd over 12 months into the S&P 500 — and you'll see something that contradicts the 2-in-3 headline stat directly: dollar-cost averaging wins. As of this writing, a $10,000 lump sum invested on January 2, 2020 (at a close of $3,257.85) is worth roughly $23,557 today; the same $10,000 split into 12 monthly tranches from January through December 2020 is worth roughly $24,319 — DCA ahead by about $762, or roughly 3.2%.
The reason is right there in the tranche dates. The lump sum bought its entire position on January 2, 2020, near the market's pre-crash high. The DCA plan's third and fourth tranches landed on March 2 and April 1, 2020 — right as the fastest bear market in modern history was bottoming out, with the April tranche buying in at roughly 24% below the January entry price. Those cheap tranches added enough extra units to the DCA position that, once the market staged its historic V-shaped recovery through the rest of 2020 and beyond, DCA's larger unit count outran lump sum's earlier-but-smaller position. Nobody had to predict the crash for this to work — the schedule simply happened to land tranches in the trough. That's exactly the kind of path-dependent outcome a smoothed assumed-return calculator can never show you, and exactly why this tool runs on real closes instead.
What "winner" actually means here
The verdict tile above compares the two strategies' end values — each strategy's total units multiplied by the most recent close — and calls it a tie only when the two values land within a penny of each other (which in practice means "never, at this precision," but the check exists for completeness). Every other outcome is a clean win for whichever strategy accumulated more value from the same total dollars invested. The chart panel plots both strategies' cumulative portfolio value at each DCA tranche date, so you can see not just who won at the end but how the gap opened or closed along the way — DCA's line typically starts below lump sum's (since only part of the money is invested early on) and either closes the gap, crosses over, or never catches up, depending entirely on what prices actually did during the contribution window.
What this backtest doesn't model
This is a historical price backtest, not a financial plan, and it deliberately leaves several things out.Dividends aren't included on either side — every figure is price return only, which understates both strategies' real historical returns by something like 1.5-2 percentage points a year, though it shouldn't flip which one wins since both sides are equally understated. Taxes, trading fees, and bid-ask spreads aren't modeled at all — a real DCA plan executed through a brokerage incurs none of those on this page, but would in real life. Only one historical path is shown— this is a single backtest over what actually happened, not a Monte Carlo simulation across thousands of possible futures, so a result here describes one specific past, not a distribution of likely outcomes. And the start date is always January 1st of the year you pick — there's no way to test a mid-year start, and the DCA schedule always runs monthly, never weekly or quarterly. Treat every number here as a lens for understanding how timing plays out historically, not as a forecast or a recommendation.
FAQ
Is lump sum better than DCA?
On average, yes — and by a meaningful margin. Vanguard's oft-cited research on US, UK, and Australian markets found lump sum beat dollar-cost averaging into the same index roughly two times out of three over rolling historical periods, simply because markets rise more often than they fall, so money that's invested sooner spends more time compounding. Our companion article, "Lump Sum vs. Dollar-Cost Averaging" (linked in the prose below), walks through that "2-in-3" framing in more depth. But two-in-three is not three-in-three: the calculator above exists precisely because the outcome flips on the specific window you test, and "on average" tells you nothing about the one path you're actually about to live through.
What did the data say for 2020?
2020 is the textbook exception, and it's why we picked it as the default worked example above. A $10,000 lump sum invested in the S&P 500 on January 2, 2020 rides straight into the fastest bear market in history — the index fell roughly a third in five weeks that February and March — before the sharpest V-shaped recovery on record. A 12-month DCA plan, by contrast, has tranches scheduled to land right in that crash: its April 2020 purchase bought in at a price roughly 24% below the January entry. Run the numbers yourself with the 2020 / 12-month / S&P 500 preset below — DCA comes out ahead here, the opposite of the usual result, precisely because the crash handed it cheaper units mid-plan without anyone having to predict it in advance.
Which index should I pick?
Pick whichever index actually represents where your money would have gone. The S&P 500 (ticker ^GSPC, priced in USD) tracks 500 of the largest US-listed companies and is the standard proxy for "the US stock market." The S&P/TSX Composite (^GSPTSE, priced in CAD) plays the same role for the Canadian market — it's more concentrated in financials, energy, and materials than the S&P 500, so its shape through any given crash or rally can look meaningfully different. If you're a Canadian investor holding US index funds, use the S&P 500; if you're comparing to a Canadian brokerage account or TSX index fund, use the TSX. The two aren't directly comparable dollar-for-dollar since one runs in USD and the other in CAD — this tool doesn't convert between them.
Does this include dividends?
No — every number on this page is price return only, exactly like the rest of this site's backtesting tools (see the Time Machine). Both the lump sum and DCA strategies are marked purely on index price appreciation; reinvested dividends, which have historically added something like 1.5-2 percentage points a year to broad-index total returns, aren't modeled at all. That understates both strategies' true historical returns by roughly the same proportion, so it shouldn't flip which one wins — but treat every dollar figure above as a floor, not a ceiling, on what actually happened.
What period should I test?
Test more than one. A single 12-month window tells you what happened in that window, not what tends to happen — the whole reason the 2-in-3 stat above exists is that it's an average over many overlapping periods, not a guarantee about any one of them. A useful habit: run the same amount and schedule starting in a calm bull-market year (say, 2017 or 2019), then again starting right before a known drawdown (2008, 2020, 2022), and compare. If DCA only wins in the crash years and lump sum wins everywhere else, that's not a bug in the tool — that's the actual historical pattern showing up in real prices.
Is this advice?
No. This is a historical backtest over real, unmanaged index price data — it shows you what a specific lump-sum or DCA schedule would have been worth today had you started on a specific date in the past, nothing more. It doesn't account for your taxes, fees, account type, risk tolerance, other holdings, or what markets will do next, and past prices are not a forecast of future ones. Treat it as a way to build intuition about how timing decisions actually played out historically, not as a recommendation to invest a specific way — talk to a licensed financial professional before acting on anything you learn here.
Documented, not advised. This calculator is for education; verify decisions with a licensed professional.