Guide
Lump Sum vs Monthly Investing (Illustration)
Same money, different timing. Here’s how a lump sum and monthly deposits stack up when the total contribution and timeline stay the same.
Published: March 12, 2025 · Updated: December 21, 2025 · By FinToolSuite Editorial
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Run a lump sum case and a monthly case side by side with your own numbers.
Open the calculatorQuick answer
Lump sum: all money compounds from day one. Monthly: deposits spread out, each compounding for less time. Outcomes depend on timing, rate assumptions, and consistency.
Disclaimer
Educational purposes only; not financial advice. Examples are illustrative; real returns vary and investments can go down as well as up. Fees, taxes, inflation, and rules vary by provider and country.
Set up a fair comparison
- Same total contribution
- Same time horizon
- Same nominal rate and compounding frequency
- Only the deposit timing changes
Worked example (10 years)
Total intended contribution: £12,000 over 10 years. Rate: 5% annually. Compounding: monthly.
Option A: £12,000 lump sum today. Option B: £100/month for 10 years (total £12,000).
| Scenario | Total contributed | Ending balance (approx.) | Interest earned (approx.) |
|---|---|---|---|
| Lump sum | £12,000 | ~£19,550 | ~£7,550 |
| Monthly (£100) | £12,000 | ~£15,500 | ~£3,500 |
Try this comparison in the calculator.
Why the results differ
- Lump sum has more time in the market/account.
- Monthly deposits arrive gradually, so each has less time to grow.
- Positive rates often favor earlier deposits, but outcomes depend on timing and returns.
Contribution timing detail
Start-of-month deposits compound slightly longer than end-of-month. The difference is usually modest but can add up over time.
More on timing: contribution timing: start vs end of month.
When monthly contributions can be useful
- If you don’t have a lump sum but can add steadily.
- To build a habit and see progress over time.
- To plan scenarios with consistent deposits.
More on monthly deposits: monthly contributions and compounding.
Common mistakes
- Comparing scenarios with different total contributions.
- Changing rate, time, and contributions all at once.
- Assuming returns are guaranteed.
FAQ
Is lump sum always better than monthly investing?
Not always. Lump sums compound longer, but actual results depend on timing, returns, and consistency.
How do I compare fairly?
Keep total contribution, timeline, and rate the same. Change only the deposit timing.
What if I have part lump sum and part monthly?
Model a hybrid: a starting lump sum plus monthly deposits. Keep totals aligned to compare.
Does compounding frequency matter here?
More frequent compounding nudges results, but time and contributions often have a bigger effect.
Does contributing at the start of the month change results?
Yes, slightly. Start-of-month deposits compound a bit longer than end-of-month.
What if rates vary year to year?
Real returns can fluctuate. Scenario testing shows ranges but can’t predict exact paths.
How do fees/taxes/inflation affect the comparison?
They reduce effective outcomes. You can model a lower rate as a rough adjustment.
How do I model this in a calculator?
Run two scenarios: one lump sum, one with monthly contributions. Keep total contribution and years the same.
Compare timing in the tool
Run a lump sum vs monthly case, keeping total contributions and time constant.
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