Backtest dollar-cost averaging vs lump-sum on real historical prices. See what buying every week would have earned.
| Lump sum | Dollar-cost averaging | |
|---|---|---|
| Historical average return | Higher in about 2 of 3 periods | Lower on average |
| Worst-case outcome | Worse — full exposure to a bad entry | Better — entry price is spread out |
| Requires a large sum upfront | Yes | No — suits regular income |
| Emotional difficulty | High — one decision, full regret risk | Low — automatic and repeatable |
| Transaction fees | One | One per purchase |
Historically, no — Vanguard found lump-sum investing outperformed about two thirds of the time, because markets rise more often than they fall. DCA reduces the risk of a badly timed entry and is far easier to stick to, which is why it remains widely used.
No. It spreads your entry price across time, which softens the impact of a bad entry point, but if the asset falls persistently you will still lose money. No purchase schedule can prevent that.
Over multi-year periods the difference is negligible. Choose based on fees — if each purchase costs a flat fee, buy less often — and on whichever schedule you will actually maintain.
No. It compares gross returns only. Real fees, spreads and taxes reduce both results, and typically affect DCA more because it involves many transactions rather than one.
Because the result depends entirely on the price path in that specific window. This is the central limitation of any backtest, and the reason a single favourable period is not evidence that a strategy works.
No. It is an educational illustration of historical arithmetic, not advice. Speak to a qualified financial adviser about decisions involving your own money.
From the CoinGecko public API. If live data is unavailable the tool clearly labels the result as an illustrative backtest on synthetic prices, which should not be read as real history.