Putting a lump sum into the market at once beat spreading it over a year in about four of every five twelve-month windows since 1993.
Spreading the money in did not change how often the money ended below what was paid in. It changed how bad the worst window was.
Did dollar-cost averaging beat a lump sum? Across 394 twelve-month windows on US shares since 1993, the lump sum finished ahead in 78.9% of them.
The median gap in the lump sum's favour was $752.
Dollar-cost averaging won when prices spent the year below their day-one level. It beat the lump sum by the most money in a window that began in September 2008.
It did not make a loss after twelve months any rarer. It made the worst window less bad.
How the two were tested
One pays everything in on day one. The other pays in twelve monthly instalments.
The lump sum puts $12,000 into US shares on the first trading day of the window. US shares here means SPY (the S&P 500 exchange-traded fund, or ETF) with dividends reinvested. Dollar-cost averaging puts in $1,000 on that same day, then $1,000 on the first trading day of each of the eleven months that follow.
Both are valued on the first trading day of the thirteenth month, twelve months after the window opens. The last instalment has therefore been held for one month.
A single window shows only one path, because the answer changes with the start month. So every start month from January 1993 to October 2025 is run, which gives 394 windows. Neighbouring start months share eleven of their twelve months, so these are not 394 independent tests. The record behind them is about thirty-three years.
Cash waiting to be invested earns nothing in the base case. Tax, dealing costs and the gap between buying and selling prices are not modelled.
Which one won more often?
The lump sum, in 78.9% of windows.
Source: YX Insights price data
Chart 1 gives the gap between the two in every window, ordered from the one where dollar-cost averaging did best to the one where it did worst. The bars sit above the line in 311 of the 394 windows, which is where the lump sum finished ahead.
The median gap in the lump sum's favour was $752. Measured against what the instalments were worth at the end, the median gap was 5.9%.
US shares rose over 320 of the 394 twelve-month stretches, or 81.2% of them, so money held back in cash missed those rises.
78.9% is how often the lump sum finished ahead in this record, on this index, over these dates. It says nothing about any year ahead.
The overlap is not what produces that figure. Taking only January starts, which share no months with each other, leaves 33 windows. The lump sum finished ahead in 25 of them.
When did spreading it in win?
When prices across the instalment months averaged below the price on day one.
Source: YX Insights price data
Chart 2 takes the two windows where the gap in dollars was widest. A window beginning in September 2008 left the lump sum at $9,648 and the instalments at $13,280, a gap of $3,632 in favour of spreading it in. A window beginning in March 2009, six months later, left the lump sum at $19,461 against $14,189.
Those two windows open six months apart, around the same market bottom. A window that opens before a fall buys its later instalments at lower prices. A window that opens at a bottom buys the recovery at rising prices.
That happened in falling markets whether or not prices recovered by the end. The worst window of all, from March 2008, fell the whole way through. The instalments still finished ahead.
January 2008 and January 2022 both went the same way as September 2008, the instalments ending $1,349 and $1,457 ahead.
What did dollar-cost averaging actually change?
The size of the worst case, not how often there was one.
The worst window in the record began in March 2008. It was the worst for both approaches. The lump sum ended at $6,498. The instalments ended at $7,607.
Measure | Lump sum | Dollar-cost averaging |
|---|---|---|
Windows finished ahead | 78.9% | 21.1% |
Worst window, from March 2008 | $6,498 | $7,607 |
Windows ending below the $12,000 put in | 74 of 394 (18.8%) | 79 of 394 (20.1%) |
Source: YX Insights price data
The table sets that against how often each approach ended below the $12,000 that went in. The lump sum finished underwater in 74 of the 394 windows. The instalments finished underwater in 79, which is about as often.
Five windows separate those two counts. The windows also overlap: on the 33 January starts, which share no months with each other, the figures are seven and eight.
Spreading the money in did not make a loss after twelve months any rarer in this record. It left more in the worst window, because less of the money had been exposed for the full year.
Does the waiting cash change it?
It narrows the gap. The lump sum still finished ahead in 72.6% of windows.
Source: YX Insights price data
Chart 3 pays the uninvested cash interest instead of leaving it idle. The interest goes in with the instalments, so they pay in $12,218 against the lump sum's $12,000. On that basis the lump sum's win rate falls from 78.9% to 72.6%. The 4% is a flat assumption applied across the whole record, not a rate measured year by year.
In this record the lump sum finished ahead in about four of every five windows. Spreading the money in narrowed the worst window without reducing the number of losing ones.
The horizon matters to that result. Our guide to $500 a month for twenty years runs the same comparison over twenty-year windows, where a lump sum finished ahead in all 165 of them.
Our guide to reading a backtest covers what a result like this one can and cannot support.
Get the next explainer
The Academy is free to read, here on the web. The Long Trend, our free weekly letter, comes by email.
Learn more with YX Insights
This explainer is part of the YX Insights Academy. Each one takes a single idea and checks it against real data.
The same approach runs through everything else we publish:
Systematic Portfolio: ready-made portfolios for Macro & Megacaps and for Commodities. We publish the holdings and every change.
Multi-model Signals: a daily long-or-flat call on every name we cover. Each call shows how strongly our four models agree.
Research: company deep dives, macro commentary and essays on how we test.
Good places to start on the website:
Academy: more explainers like this one.
Start here: get our free weekly letter by email.
Macro & Megacaps Systematic Portfolio and Commodities: the two portfolios in detail.
Track record: live results since 3 August 2026, plus the ten-year backtest.
Upgrade: get the Systematic Portfolio, Multi-model Signals and research in full.
Common questions about dollar-cost averaging and lump sum investing
Is it better to invest a lump sum or spread it out?
On the record tested here, the lump sum finished ahead in 78.9% of 394 twelve-month windows on US shares since 1993, with a median gap of $752. Shares rose over 320 of those 394 stretches, so money held back in cash missed those rises. That is what happened historically, not a forecast for any particular year.
When does dollar-cost averaging beat a lump sum?
When prices across the instalment months average below the price on day one, because the instalments buy the lower prices. That happened in falling markets whether or not prices recovered by the end. The strongest case in this record began in September 2008, where $12,000 spread over twelve months ended at $13,280 against $9,648 for the lump sum.
Does dollar-cost averaging reduce risk?
It left more in the worst window without reducing how often there was a poor one. The worst window began in March 2008, ending at $7,607 for the instalments against $6,498 for the lump sum. Part of that is mechanical, because less of the money had been exposed for the full year. The instalments ended below the $12,000 put in about as often, 20.1% of windows against 18.8%.
Does it matter what the uninvested cash earns?
It narrows the gap without reversing it. With the waiting cash earning nothing, the lump sum finished ahead in 78.9% of windows. With it earning 4% a year, the lump sum finished ahead in 72.6%.
DISCLAIMER: This article is strictly educational. Any information or analysis in this note is not an offer to sell or the solicitation of an offer to buy any securities. Nothing in this note is intended to be investment advice and nor should it be relied upon to make investment decisions. Any opinions, analyses, or probabilities expressed in this note are those of the author as of the note's date of publication and are subject to change without notice.