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DCA vs Lump Sum — rolling-window backtest

You have a windfall: invest it all at once, or drip it in? This rolls the decision across every start year since 1928 on S&P 500 total return, credits undeployed cash the T-bill, and puts the win-rate and the 5th-percentile downside on screen — net of fees, tax, and inflation.

S&P 500 total return · asOf 2026-01 3-mo T-bill · asOf 2026-01 CPI-U · asOf 2026-01 Updated 2026-07-06

Assumptions

live · every start year since 1928
The windfall you are choosing how to invest.
DCA invests an equal tranche at the start of each year (annual granularity).
Account type
Taxable applies 15% long-term capital-gains tax at liquidation.
Reinvest dividends
On uses S&P 500 total return. Off subtracts an approximate 1.9% yield.
Credit undeployed cash (T-bill)
DCA cash waiting to be invested earns the 3-month T-bill.
Show results in
Real deflates each window by December CPI-U over its span.
100 bps = 1.00%/yr, dragged off the invested market return.
Run the backtest across every start year since 1928.
—
Lump median terminal — 5th-pct downside — ▲ —
Median lump-sum path Range across start years (p5–p95)
Set your inputs — this rolls the decision across every start year, not one lucky date. Markets vary, so the honest answer is a range, not a single number.

Terminal value range

lump sum p5 · median · p95

Coral = 5th-percentile downside, green = median, lime = 95th-percentile upside. The band spans the DCA outcome range for the same windows.

Lump − DCA spread

% of capital, every start year

Bars right of the “tie” line are start years where investing all at once ended ahead; bars left are where DCA won.

— Lump IRR p5–p95
— DCA IRR p5–p95
Methodology & sources
Show the math ›
Run the backtest to see the worked numbers for your inputs.
Assumptions & sources ›
AssumptionValueSource · asOf
Equity return S&P 500 total return Damodaran (NYU Stern), annual · asOf 2026-01 · dividends reinvested
Undeployed cash 3-month T-bill Damodaran (NYU Stern), avg rate in year · asOf 2026-01
Inflation (real mode) CPI-U, Dec/Dec BLS · asOf 2026-01
Coverage 1928–2025 every start year with a full deployment window
Taxable liquidation 15% LTCG on gains applied at end of window; annual dividend tax not modeled (v1)

Outcomes are evaluated at the end of the deployment window, where both strategies are fully invested and compound identically thereafter. Annual granularity uses the Damodaran yearly series; monthly Shiller granularity is a planned refinement.

Written by Author to be finalized before launch · Updated 2026-07-06

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