Comparison
Lump Sum vs Dollar Cost Averaging Backtest
Lump sum means investing all at once. Dollar cost averaging (DCA) means investing a fixed amount on a schedule. A history checker can show how each pattern would have played out in a chosen window, but results depend on timing.
Published: December 26, 2025 · Updated: December 26, 2025 · By FinToolSuite Editorial
Disclaimer
Educational purposes only; not financial advice. Examples are illustrative and simplified. Past performance is not a reliable indicator of future results. Market returns can be negative.
Try the calculator
Set a lump sum and a contribution pattern to compare how timing changes the path.
Open the Investment History CheckerQuick answer
- Lump sum invests all at once on day one.
- DCA spreads the same total money over time.
- Results differ because prices move between deposits.
Definitions
Lump sum: one upfront deposit. DCA: fixed contributions (e.g., monthly), buying more when prices are lower and less when prices are higher. Same total money, different timing.
Why timing matters
If prices rise steadily, lump sum benefits from more time in the market. If prices fall then recover, DCA buys more shares at lower prices. Outcomes depend on the path, not just the total invested.
Worked example (illustrative)
| Month | Price | Lump sum shares | DCA shares (100/month) |
|---|---|---|---|
| 1 | 50 | 20.0 | 2.0 |
| 2 | 45 | — | 2.22 |
| 3 | 55 | — | 1.82 |
Same total money (300) but different share counts and timing. A rising path helps the lump sum that started at 50. A dip in month 2 lets DCA buy more shares before prices rise again. Illustrative only.
Callout: DCA is a contribution pattern, not a guarantee. Backtests show historical paths, not future outcomes.
Hindsight traps
- Cherry picking start dates that favor one method.
- Ignoring drawdowns and stress.
- Comparing different currencies or definitions (price vs total return).
- Forgetting fees, taxes, dividends may be excluded.
Checklist for comparing deposit styles
- Use the same date window for both runs.
- Compare total return, CAGR, and max drawdown together.
- Scan best year, worst year, and the yearly table for concentration.
- Note currency and what is included (dividends, fees, taxes).
- Export results to review side by side.
FAQ preview
Is DCA always better than lump sum?
No. Outcomes depend on the price path and timing; neither method is guaranteed.
How do I set fair dates?
Use the same start and end dates for both runs and test more than one window.
Do contributions change percent returns?
Percent returns can look different because cash enters at different times. Focus on totals, drawdowns, and yearly patterns.
Why do backtests differ from my broker?
Fees, taxes, dividends, and execution prices can differ from price-based backtests.
Where can I learn more about DCA backtests?
Can I export results?
Yes. Use the export options in the tool for CSV or PDF snapshots.
Compare deposit styles in the tool
Run a lump sum and a DCA scenario with the same dates, then export and review side by side.