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Ledgerwise

Lump sum vs averaging in

simulator

I have a windfall. All at once, or spread out?

Tests both strategies against every historical start year and prices what averaging in costs — and what it buys.

Your windfall

12 months
10 years
100%
2.00%

Higher cash rates narrow the gap.

Tested against every historical start year

88 overlapping 10-year periods since 1928.

Investing at once won
72%

of historical start years

Median advantage
$13,511

Investing at once, versus spreading in

Worst case for investing at once
$66,474

Starting in 2008

The difference, by start year

Above the line, investing at once won. Below it, spreading in did.

-$50k$0$50k1940196019802000Advantage to investing at once
The dips are the start years just before a major crash — precisely the fear this decision is about.

What averaging in actually buys

Spreading the money in is not a return strategy — the arithmetic above is settled. It is regret insurance, and this calculator prices the premium at roughly $13,511 in the median case. If investing $100,000 in a single day and watching it fall 30% the following month would make you abandon investing entirely, that outcome costs far more than the premium. Buying the insurance is a legitimate choice; not knowing you were buying it is not.

Why this matters

The logic is simple: if markets have a positive expected return, holding cash to deploy later means holding a lower-returning asset for longer. Spreading a lump sum over twelve months leaves, on average, half the money out of the market for six months.

One important boundary. This applies only to money you already hold. Investing each pay cheque as it arrives is not dollar-cost averaging in this sense — there is no lump sum being withheld, and the comparison does not apply.

Two things narrow the gap: a high cash rate relative to expected equity returns, and a shorter spreading period. Drag those sliders and you can find the conditions under which the decision genuinely stops mattering.