Dollar cost averaging calculator
Invest it all at once, or feed it in? The same money, the same term — and an honest account of what this model cannot tell you.
Calculator
The comparison, and the working behind it
All at once, against feeding it in
Over 25 years, at 5.00% a year, investing all at once ends ahead by
£9,629.01
10.35% of the pot the lump sum reaches.
| Figure | All at once | 60 instalments over 5 years |
|---|---|---|
| Paid in | £30,000.00 | £30,000.00 |
| Charges taken | £4,885.35 | £4,139.52 |
| Final value | £93,078.16 | £83,449.15 |
The two “paid in” figures are identical by construction — the lump sum is £500.00 a month multiplied by 60. The charges are not identical, because a percentage charge is levied on the value held and the lump sum holds more of it, sooner.
This model cannot show you the reason anyone feeds money in gradually. Under a single fixed rate the money invested earliest compounds longest, so at any positive rate the lump sum wins — not as a finding, but as an arithmetic certainty with no input on this page that could change it. The actual argument for spreading purchases is about variance: putting everything in the week before a fall is a materially worse outcome than putting a twelfth of it in, and a projection with one path and no volatility has no representation of that at all.
What this page can show honestly is the shape of the trade. Run the same comparison at a negative growth rate — the ladder below does it for you — and the sign flips. Feeding money in is insurance: in a rising market you pay the premium, in a falling one it pays out. That is a real property of the two cash-flow shapes, measured here rather than asserted, and it is as close to the volatility argument as a constant-rate model can honestly get.
This is not a forecast. It is what would happen if one rate held exactly, every period, for 25 years. Nobody can tell you the rate — you typed it — and the whole subject of this page is what a model with no order to its returns leaves out.
Where the comparison changes sides
| Growth a year | All at once | Fed in over 5 years | All at once, less the drip |
|---|---|---|---|
| -10.00% | £1,973.18 | £2,610.63 | -£637.45 |
| -5.00% | £7,624.37 | £8,751.10 | -£1,126.73 |
| -2.00% | £16,586.91 | £17,592.54 | -£1,005.63 |
| 0.00% | £27,486.21 | £27,724.16 | -£237.95 |
| 2.00% | £45,094.08 | £43,334.63 | £1,759.45 |
| 5.00% — yours | £93,078.16 | £83,449.15 | £9,629.01 |
| 8.00% | £188,238.57 | £158,021.92 | £30,216.65 |
| 10.00% | £297,804.63 | £239,727.70 | £58,076.93 |
A negative figure in the last column means feeding the money in came out ahead. Nothing about the two plans changes down the table except the rate — the same money, the same instalments, the same term.
But the money waiting to be invested earns interest
Money waiting to go in is not idle — it earns interest. This calculator does not credit that interest to the drip, because a cash balance being spent down over 60 instalments is not a schedule this engine can produce. What it can produce is a ceiling: if the whole sum had sat in cash at 3.00% for the whole 5-year window, it would have earned £4,778.19.
The true figure is well below that, because the cash balance is falling to zero throughout — on a level drip it is close to half. So the ceiling is a bound and not an estimate, and it is only ever useful in one direction.
Here it settles the question. £4,778.19 is less than the £9,629.01 gap, so no amount of interest on the waiting cash could close it. Feeding the money in costs more than the cash it leaves idle can earn, at these assumptions.
Year by year, both sides
| Year | All at once: opening | All at once: closing | Drip: paid in | Drip: closing | Difference |
|---|---|---|---|---|---|
| 1 | £30,000.00 | £31,389.92 | £6,000.00 | £6,149.51 | £25,240.41 |
| 2 | £31,389.92 | £32,844.27 | £6,000.00 | £12,583.96 | £20,260.31 |
| 3 | £32,844.27 | £34,365.98 | £6,000.00 | £19,316.51 | £15,049.47 |
| 4 | £34,365.98 | £35,958.21 | £6,000.00 | £26,361.00 | £9,597.21 |
| 5 | £35,958.21 | £37,624.20 | £6,000.00 | £33,731.88 | £3,892.32 |
| 6 | £37,624.20 | £39,367.37 | £0.00 | £35,294.72 | £4,072.65 |
| 7 | £39,367.37 | £41,191.29 | £0.00 | £36,929.97 | £4,261.32 |
| 8 | £41,191.29 | £43,099.72 | £0.00 | £38,640.98 | £4,458.74 |
| 9 | £43,099.72 | £45,096.56 | £0.00 | £40,431.22 | £4,665.34 |
| 10 | £45,096.56 | £47,185.92 | £0.00 | £42,304.41 | £4,881.51 |
| 11 | £47,185.92 | £49,372.08 | £0.00 | £44,264.42 | £5,107.66 |
| 12 | £49,372.08 | £51,659.53 | £0.00 | £46,315.25 | £5,344.28 |
| 13 | £51,659.53 | £54,052.96 | £0.00 | £48,461.07 | £5,591.89 |
| 14 | £54,052.96 | £56,557.29 | £0.00 | £50,706.32 | £5,850.97 |
| 15 | £56,557.29 | £59,177.62 | £0.00 | £53,055.59 | £6,122.03 |
| 16 | £59,177.62 | £61,919.37 | £0.00 | £55,513.71 | £6,405.66 |
| 17 | £61,919.37 | £64,788.14 | £0.00 | £58,085.70 | £6,702.44 |
| 18 | £64,788.14 | £67,789.81 | £0.00 | £60,776.86 | £7,012.95 |
| 19 | £67,789.81 | £70,930.60 | £0.00 | £63,592.71 | £7,337.89 |
| 20 | £70,930.60 | £74,216.88 | £0.00 | £66,539.03 | £7,677.85 |
| 21 | £74,216.88 | £77,655.41 | £0.00 | £69,621.85 | £8,033.56 |
| 22 | £77,655.41 | £81,253.25 | £0.00 | £72,847.50 | £8,405.75 |
| 23 | £81,253.25 | £85,017.78 | £0.00 | £76,222.60 | £8,795.18 |
| 24 | £85,017.78 | £88,956.74 | £0.00 | £79,754.04 | £9,202.70 |
| 25 | £88,956.74 | £93,078.16 | £0.00 | £83,449.15 | £9,629.01 |
The “all at once” side has no paid-in column, and that is the whole difference between the two plans rather than an omission: its £30,000.00 is already there on day one, so it appears as the opening balance of year one and never as money going in. The drip’s paid-in column runs for 5 years and then stops, and the difference column goes on widening afterwards without another penny changing hands, because by then it is only compounding. The CSV export contains every period of both sides, not just the year ends.
A worked example you can check
These are the figures the calculator above loads with, so every number in this section can be checked against it without typing anything. £500.00 a month for 5 years — 60 instalments, £30,000.00 in total — against the same £30,000.00 invested in one go on day one. Both are measured over 25 years at 5.00% a year with a 0.35% annual charge.
| Invested all at once, after 25 years | £93,078.16 |
|---|---|
| Fed in over 5 years, after 25 years | £83,449.15 |
| Difference | £9,629.01 |
| That difference as a share of the larger pot | 10.35% |
| The most the waiting cash could have earned at 3.00% | £4,778.19 |
Three things in that table are worth pausing on.
- The gap is not a fee and nobody charged it. It is the growth that money not yet invested did not earn, compounded for the rest of the term. Every penny of it is produced by when the money arrived, and nothing else — the two sides pay in exactly the same £30,000.00.
- Cash interest cannot close it here. Even on the impossible assumption that the whole £30,000.00 sat earning 3.00% for the entire 5-year window — impossible because the money is being spent down — that is £4,778.19 against a £9,629.01 gap. The bound settles it, at these assumptions and in this direction only.
- And it changes sides. At 10.00% a year the lump sum is £58,076.93 ahead; at -10.00% a year it is -£637.45 — a negative figure, meaning the drip wins. Nothing about the two plans differs down that ladder except the rate. This is the whole trade: in a rising market you pay for spreading your purchases, in a falling one you are paid for it.
Methodology: exactly what this calculator does, and what it cannot do
What the two sides are
All at once is one projection: the whole sum as the opening balance, nothing added afterwards, run for the term. Fed in is two projections chained: instalments paid at the start of each period over the phasing window, and then the balance that leaves is the opening balance of a second projection with no contributions that runs for the rest of the term. The join falls on a year boundary, which is what makes the chain exact — the annual fee accumulator resets there anyway, so nothing has to be carried across the seam by hand.
The sum invested all at once is defined as the instalment multiplied by the number of instalments. That is the one thing that makes the comparison mean anything: a page with separate boxes for a lump sum and a monthly amount would let you compare £50,000 now against £100 a month and call the difference dollar cost averaging.
Why a fixed-rate model always says the lump sum wins
Because under a single positive rate, money invested earlier compounds longer, and there is no other mechanism in the model. The gap is exactly the growth the not-yet-invested money did not earn, carried forward to the end of the term. No input on this page changes that while the rate is positive, so it is stated at the top of the answer rather than presented as a finding.
The reason people spread their purchases is not in this model at all. It is about variance — the difference between putting everything in the week before a fall and putting a twelfth of it in — and a projection with one path has no variance to represent. This is the point at which most calculators of this kind mislead: they are arithmetically correct and they answer a different question from the reader’s.
The part that can be shown honestly is the sign change. The ladder runs the same comparison at eight growth rates: the gap is positive where the rate is, negative where it is not. That is the shape of an insurance premium, and it is measured by running the engine rather than argued from a textbook.
Why the crossing is not exactly at zero growth
Because the charge is levied on the value held, and the lump sum holds more value throughout the phasing window. At a growth assumption of nothing the two sides end up with the same money in and the same growth — none — but the lump sum has paid more of the annual charge, so the drip comes out very slightly ahead. Where the crossing actually falls depends on the charge, and this page reports the measured columns rather than asserting a figure.
The cash ceiling, and why it is a bound
Money waiting to be fed in earns interest, and this model does not credit it — a balance being spent down at an uneven rate is not a schedule this engine can produce, and inventing one would be arithmetic on money done outside the engine. So instead of an estimate there is a ceiling: what the whole sum would earn at your cash rate over the whole window. The true figure is well below it, because the balance is falling to zero throughout.
A bound is only useful in one direction, and the page uses it in that direction only. When the ceiling is below the gap, interest cannot close it and the question is settled. When it is above, nothing follows and the page says so instead of splitting the difference.
Conventions, stated
Instalments are paid at the start of each period, which is what a standing order on payday is — and which is the timing least flattering to this page’s headline, since it gives the drip one more period of growth than the alternative. The rate is treated as an effective annual rate, so the figure you type is the figure a year compounds to. The charge is deducted from the pot and divides nominally across the year’s periods, because a fee schedule is a tariff rather than a compounding return. Every figure is rounded to whole pence at each period boundary, so every row of the table adds up exactly rather than approximately.
Sources, and why there is no rates table
Most calculators on this site cite gov.uk, because they implement statutory rates, bands and thresholds that can be checked against a published source. This one has no statutory figures at all. The rate, the charge, the window and the term are yours. So this page carries no verification stamp and will not borrow one. The claim it makes is arithmetic only.
What this is not
It is not a forecast, and on this page that is more than a disclaimer — the absence of any variation in the rate is the reason the comparison comes out the way it does. It does not model tax, ISA or pension allowances, dealing charges on each purchase (the ETF calculator does), or the interest actually earned by waiting cash. And it is information, not advice: it recommends neither approach and knows nothing about your circumstances, including the one that usually decides this question, which is how you would feel about a fall the week after you invested.
Nothing you type here is transmitted or stored — there is no application server and no database. A share link is the exception: it carries your figures in the URL. What that means.
Frequently asked questions
- Is it better to invest a lump sum or drip-feed it in?
On a fixed-rate model the lump sum wins whenever the rate is positive, and it is not close: on this calculator's defaults — £500.00 a month for 5 years against the same £30,000.00 invested at once, over 25 years at 5.00% — the lump sum ends £9,629.01 ahead, which is 10.35% of the pot. But that answer is a property of the model rather than of the world: a projection at a single constant rate has no volatility in it, and volatility is the entire reason anyone spreads their purchases. Treat the figure as the price of the insurance, not as a verdict on whether to buy it.
- Why does this calculator say dollar cost averaging loses?
Because it is arithmetic on one path. Under a single positive rate, money invested earlier compounds longer, so any plan that holds money back finishes behind by exactly the growth that money did not earn. There is no input on this page at which a positive rate produces a different answer. What a one-path model cannot show is the case for spreading purchases, which is about the range of outcomes rather than the average one — investing everything the week before a fall is much worse than investing a twelfth of it, and a model with no falls in it cannot represent that.
- When does dollar cost averaging come out ahead?
When the market falls. Run the comparison at a negative growth rate and the sign flips — on the default figures, at -10.00% a year the drip finishes ahead rather than behind. That is the shape of the trade: feeding money in is insurance, so it costs you in the state of the world you were hoping for and pays you in the one you were not. It also comes out very slightly ahead at a growth rate of nothing, because the lump sum holds a larger balance throughout and therefore pays more of a percentage charge.
- Does it account for the interest my cash earns while it waits?
Not inside the comparison, because a cash balance being spent down over a phasing window is not a schedule this engine can produce, and inventing one would be arithmetic done outside it. What the page gives instead is a ceiling: what the whole sum would earn at your cash rate over the whole window, which is strictly more than the truth because the balance is falling to zero throughout. On the default figures that ceiling is £4,778.19 against a £9,629.01 gap, so interest could not close it however the cash was actually held. Where the ceiling is above the gap, nothing follows and the page says so.
- Can I spread the money over six months rather than a year?
Not on this page. The phasing window is a whole number of years, because the projection runs in whole years — a part-year term would need a part-period, and there is no honest way to charge an annual fee or apply a year of growth to one. A year is therefore the shortest window at any frequency. Switching the frequency to quarterly makes that four instalments over the year rather than twelve, which changes the shape of the drip without changing the money.
- Is investing monthly the same thing as dollar cost averaging?
Not quite, and the difference matters. Paying in every month out of a salary is not a choice between two ways of investing the same pot — the money does not exist yet, so there is no lump sum to compare against and nothing is being held back. Dollar cost averaging is the narrower case where you already have the money and choose to feed it in. This calculator models that case, which is why the sum invested all at once is defined as the instalments added up: if the money is not yet in hand, the comparison is not the one you are in.
- Is this a forecast?
No, and less so than usual. It computes what would happen if one rate held exactly, every period, for the whole term — and the flatness of that assumption is precisely what removes the effect the page is about. Real returns arrive as a sequence, the order changes the outcome, and it is the order that makes spreading purchases worth considering at all.