Is it better to invest a lump sum or spread it out?

On average, investing a lump sum sooner gives a higher expected return because the money is in the market longer. Spreading it out reduces the risk of buying right before a fall, at the cost of some expected return.

What is drip-feeding?

Drip-feeding means investing the lump sum in equal instalments over a period rather than all at once, which smooths the entry price and the emotional risk of bad timing.

Which should I choose?

If you can tolerate the risk, investing sooner usually wins on average. If a sharp fall soon after would worry you out of the market, drip-feeding can be the more comfortable choice.

Regular vs Lump Sum Calculator

This New Zealand calculator compares investing a lump sum now against drip-feeding it in over time. You enter the amount, an expected return and the period, and it shows the projected outcome of each approach, helping you weigh the higher expected return of investing early against the comfort of easing in.

Lump sum to invest

Expected return

Drip-feed over (months)

Total period (years)

projected outcome over the full period

Lump sum now$0

Drip-fed in$0

Difference$0

This assumes a steady return, so the lump sum, being invested longer, comes out ahead on average. In real markets, drip-feeding reduces the risk of bad timing at the cost of some expected return. Returns are not guaranteed. Estimate only, not financial advice.

How it works

The calculator grows the whole lump sum at your expected return for the full period. For the drip-feed, it invests the amount in equal monthly instalments over your chosen spreading period, with each instalment growing only from the month it is invested to the end. Because the lump sum is fully invested sooner, it has more time in the market and so a higher projected value under a steady return, illustrating the trade-off against the lower timing risk of easing in.

Worked example

Investing $60,000 at a 7% return over 10 years grows to about $118,000 as a lump sum. Drip-feeding it over the first 12 months delays part of the investment, so it grows to slightly less, perhaps around $114,000. The gap is the cost of the extra timing comfort.

Related calculators

Dollar-Cost Averaging Calculator: regular investing.
Compound Interest Calculator: compounding.
Investment Calculator: project investments.
Fund Fee Drag Calculator: the cost of fees.

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