Lump sum or drip-feed?
You’ve got a lump sum to invest, perhaps from a property sale, an inheritance or years of saving. Do you put it all in now, or spread it out over a few months in case the market falls? It’s one of the most common questions people ask, especially when markets are at record highs.
This calculator tests both choices against every month of US share market history since 1934. It shows how often each came out ahead, by how much, and what happened when markets were at a record, looked expensive, or had just fallen.
What history says
Investing all at once has usually come out ahead, because markets have risen more often than they’ve fallen. Money waiting on the sidelines tends to miss out. Spreading it over 12 months, the lump sum won about 7 times in 10.
Waiting for a better moment didn’t help much either. Even when the market was at an all time high, the lump sum won about three quarters of the time. When the market looked expensive, the lump sum’s lead shrank, but it still came out ahead about two thirds of the time.
The longer you spread it out, the more it tends to cost, because more of your money sits out of the market for longer.
Why it isn’t the whole story
The lump sum doesn’t always win. Investing everything just before a crash, such as in 1937, 1974 or 2008, left people well behind someone who drip-fed. Drip-feeding is a way to limit regret, and that’s worth something. If spreading it out is what gets you invested at all, that matters far more than the small difference shown here.
The comparison also leaves out fees and tax, which can differ between the two, and it’s based on the US market. Your own situation, including when you might need the money, matters too.
Over the long run, both approaches did well. Time in the market mattered far more than how you got in.
This is general information about past market behaviour, not personalised financial advice.
Want to talk it through?
Book a free 30-minute chat. Or explore more: the market timing calculator and the Shiller P/E calculator.