DCA vs lump sum.

Dollar cost averaging is an investing strategy where you invest a fixed amount at regular intervals — weekly or monthly — rather than all at once. Instead of trying to time the market, you spread purchases over time, automatically buying more units when prices are low and fewer when prices are high.

Research consistently shows that lump sum investing outperforms DCA roughly two-thirds of the time, because markets trend upward over time and money invested earlier compounds for longer. However, DCA reduces the risk of buying at a peak and is psychologically easier — particularly for investors who receive money periodically (e.g. via salary).

DCA wins when the market falls significantly during the investment period, because you continue buying at lower prices and your average cost basis drops. In a flat or declining market, the reduced timing risk of DCA is most valuable. In a consistently rising market, lump sum almost always wins.

The DCA scenario divides your total investment into equal instalments (weekly or monthly) and applies the future value of an ordinary annuity formula. The lump sum scenario compounds the full amount monthly at the same annual rate. Both assume constant returns — real markets fluctuate.

No — this calculator shows pre-tax, pre-fee nominal returns to illustrate the pure time-in-market effect. In practice you should account for brokerage on each DCA purchase (which erodes its relative return further), capital gains tax, and any fund management fees.

The ASX 200 has returned approximately 9–10% p.a. (including dividends) over the long run. A common conservative planning assumption is 7–8% p.a. for a balanced portfolio, or around 6% for a diversified multi-asset fund. Use the slider to test different scenarios.