Dollar Cost Averaging Calculator
Compare DCA (regular investing) vs a lump sum — and see how much your portfolio could grow over time.
Dollar Cost Averaging vs Lump Sum Investing
Dollar cost averaging involves investing a fixed dollar amount at regular intervals — typically monthly. Rather than trying to time the market, you buy automatically regardless of price. A lump sum is investing all available funds at once. Selling later can trigger capital gains tax: the share CGT calculator and the crypto CGT calculator work out the gain.
The Mathematics
DCA future value: FV = Monthly × ((1+r)^n − 1) / r + LumpSum × (1+r)^n
Lump sum future value: FV = LumpSum × (1+r)^n
Where r = monthly rate and n = total months.
A worked example
$60,000 invested now plus $1,000 a month for five years at 8% reaches $162,868, against $89,391 for the $60,000 left alone. Of the $120,000 put in all up, $42,868 is growth.
Which Performs Better?
In a consistently rising market, lump sum wins — money invested sooner compounds for longer. Studies show lump sum outperforms DCA about 65–70% of the time over 10-year periods. However, if you invest a lump sum just before a major crash, DCA would have been better. For most Australians who receive a salary, DCA is the practical default — you invest what you can, when you can.
The Power of Consistency
Investing $500/month for 30 years at 8% p.a. produces a portfolio of over $745,000 — from just $180,000 in contributions. The remaining $565,000 is pure compounding growth. Time in the market beats timing the market.