DCA vs Lump Sum Calculator
Compare Dollar Cost Averaging strategy vs Lump Sum investment for optimal returns
1.0 years
Total amount available for one-time investment
Total DCA investment: ₹12,00,000
NSE Index: ~12-14%, Equity MF: 10-15%
Higher volatility benefits DCA more than lump sum
| Metric | Lump Sum | DCA | Difference |
|---|---|---|---|
| Total Invested | ₹12,00,000 | ₹12,00,000 | ₹0 |
| Final Value | ₹13,52,190 | ₹12,80,933 | ₹71,257 |
| Total Gain | ₹1,52,190 | ₹80,933 | ₹71,257 |
| Return % | 12.68% | 6.74% | 5.94% |
| Risk-Adjusted Return | 0.85 | 0.64 | 0.20 |
Lump Sum Final Value
₹13,52,190
Gain: ₹1,52,190 (12.68%)
DCA Final Value
₹12,80,933
Gain: ₹80,933 (6.74%)
Market Trend: Lump sum typically wins in strong bull markets
Volatility Impact: DCA reduces risk by 5% through averaging
Time in Market: Lump sum spends 12 months fully invested vs DCA's gradual entry
Best Strategy: Invest lump sum if you can tolerate short-term volatility
Which is better: DCA or Lump Sum?
Historically, lump sum investing outperforms DCA in about 66% of cases because markets tend to rise over time. However, DCA reduces timing risk and emotional stress, making it better for risk-averse investors or volatile markets.
What is Dollar Cost Averaging (DCA)?
DCA is an investment strategy where you invest a fixed amount at regular intervals (like monthly SIP in India) regardless of market conditions. This averages out your purchase price over time and reduces the impact of market volatility.
When should I use DCA instead of lump sum?
Use DCA when: (1) You receive income periodically, (2) Markets are at all-time highs and you fear a correction, (3) You're a beginner investor, (4) You want to build investment discipline. Use lump sum when you have available capital and can tolerate short-term volatility.
How does volatility affect the comparison?
Higher volatility benefits DCA more because you buy at various price points - some low, some high - which averages out better than a single high entry point. In our calculator, this effect is captured in the volatility impact analysis.