DCA vs Lump Sum Comparison
- • Annual return is assumed constant (actual returns vary)
- • Taxes and fees are not included
- • DCA contributions are made monthly at the beginning of each month
- • Risk ranges assume normal distribution (1σ = ~68% probability)
Enter your investment conditions
Monthly equivalent: ￥10,000/month
Reference: S&P 500 ~15%, NASDAQ ~20%, Bonds ~5%
Comparison Results
Lump Sum Investment
Dollar-Cost Averaging (DCA)
Asset Growth Chart
Year-by-Year Comparison
| Year | Lump Sum | DCA | Difference |
|---|---|---|---|
| 1 | ￥1,261,394 | ￥123,300 | ￥1,138,094 |
| 2 | ￥1,325,930 | ￥252,909 | ￥1,073,021 |
| 3 | ￥1,393,767 | ￥389,148 | ￥1,004,619 |
| 4 | ￥1,465,074 | ￥532,358 | ￥932,716 |
| 5 | ￥1,540,030 | ￥682,894 | ￥857,136 |
| 6 | ￥1,618,821 | ￥841,133 | ￥777,688 |
| 7 | ￥1,701,643 | ￥1,007,467 | ￥694,176 |
| 8 | ￥1,788,703 | ￥1,182,311 | ￥606,392 |
| 9 | ￥1,880,216 | ￥1,366,100 | ￥514,116 |
| 10 | ￥1,976,411 | ￥1,559,293 | ￥417,118 |
Tips
Since the 1920s, S&P 500 data shows lump sum investing outperformed DCA about 67% of the time (Vanguard Research).
Dollar-cost averaging is a 'volatility is your friend' strategy. Buying more when prices are lower can work in your favor long-term.
Behavioral economics research shows people feel losses about 2x more strongly than gains. DCA helps mitigate this 'loss aversion bias.'
Warren Buffett said: 'Time in the market beats timing the market.'
Many countries offer tax-advantaged investment accounts (US: 401(k)/IRA, UK: ISA, Australia: Super, Canada: RRSP/TFSA).
The 'core + satellite' strategy, combining both approaches, is a popular method that leverages the benefits of each.
The biggest enemy of DCA is 'stopping midway.' Staying invested during short-term market downturns is considered crucial.
Historically, over 20+ year investment periods, there have been virtually no cases of negative stock market returns.