PORTFOLIO COMPARISON / ONE VARIABLE

DCA vs Lump-Sum Portfolio Backtest

Compare contribution schedules without changing the underlying multi-asset portfolio or its rebalancing rules.

THE QUESTION

How does contribution timing change the range of investor outcomes without changing the portfolio itself?

BASE PORTFOLIOOne-time initial investment
CONTROLLED CHANGEFixed monthly contributions
ONLY CHANGED VARIABLEContribution schedule

The base rules, data treatment, and calculation assumptions remain visible throughout the comparison. Review the controlled portfolio backtesting used to interpret this result.

WHAT TO COMPARE

Read the trade-off as a system.

  1. 01Ending value
  2. 02Money-weighted return
  3. 03Worst entry period
  4. 04Outcome dispersion

WHEN TO LOOK

Locate where the difference appeared.

Market peaksBear marketsLong expansionsHigh-volatility entries

A useful comparison shows whether an advantage was broad or created by one unusually favorable period. For a direct test of this risk, compare the same rules across multiple portfolio start dates.

OBSERVED RESULT / REAL MARKET DATA

What the comparison actually produced.

The lump sum ended $100,764 higher because all capital was exposed to a rising market from the beginning. This is a capital-timing comparison—not evidence that every future lump-sum entry will outperform.

WINDOWAug 2016–Jul 2026
CAPITAL$60,000 total capital allocated to VTI
CALCULATIONLump sum invests $60,000 on the first date. DCA invests $500 at the first trading session of each month for 120 months. Adjusted prices include reinvested distributions.
Contribution ruleCapital committedEnding valueMarket exposure
$60,000 lump sum$60,000 on day one$233,352Full period
$500 monthly DCA$60,000 over 120 months$132,588Gradual

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