In classical financial theory, lump sum wins on average because markets rise more often than they fall. Deploying capital sooner means more time in the market. Vanguard's well-known analysis found lump sum outperformed DCA roughly two-thirds of the time across US, UK, and Australian markets historically.
That said, the gap is usually modest — a few percent on average — and the downside tail for lump sum is meaningfully larger than for DCA. An investor who puts everything in at a peak right before a 30% drawdown suffers a much bigger paper loss than a DCA investor who was still averaging in during the decline.
DCA wins when markets fall or trade sideways during your deployment window. If you DCA into a market that declines 15% before recovering, your average cost is below what the lump sum paid — and once recovery arrives, DCA ends up ahead. The calculator assumes a smooth return, so it doesn't capture this win scenario, but you can approximate it mentally.
The practical recommendation for most investors: if you have a lump sum and a diversified long-term strategy, statistics favor deploying it. But if peace of mind matters and you'd panic-sell if the market dropped the week after you invested, DCA over 6-12 months can be a reasonable behavioral compromise.