Learn the stock market › Saving for the long term › Lesson 3 of 5

Lump sum or monthly investing

Short answerIf you have a sum of money, investing it all at once has usually done better than spreading it over a year. In the S&P 500 since 1928 the lump sum bought more shares in 67% of 1,175 start months, +3.8% more at the median. The reason is that the market has more often risen than fallen over a year. But in the worst cases the lump sum bought 48% fewer shares than spreading the purchases.

The question is about money you already have

Someone investing from each paycheck has no choice: the money arrives a month at a time. The question is about a sum you have now, such as an inheritance or a bonus. Buy with all of it today, or split the purchases over a few months?

We compare two people with the same sum. One buys with all of it at a month's end. The other splits it into equal parts and buys at each month's end, starting the same month. Once the last part is bought both own only the index, and from then on their holdings move up and down together. Whoever bought more shares is ahead, and stays ahead.

Who bought more shares?

Spread over	Lump sum ahead	Median	Worst for the lump sum
6 months	64%	+2.0%	−31%
12 months	67%	+3.8%	−48%
24 months	71%	+7.7%	−54%

Over twelve months the lump sum was ahead in 67% of the start months. The longer the purchases are spread, the more often the lump sum won: 64% over six months and 71% over two years. Money waiting to be invested sits outside the market, and the market has more often gone up than down.

When it went wrong

The worst time for the lump sum was buying everything in August 1931, in the middle of the slide after the 1929 crash. Spreading the purchases over a year then bought 48% more shares. The best was buying everything in March 1933, near the bottom, when the lump sum bought 60% more.

That is why many still spread their purchases. A lump sum bought just before a fall loses at once, and buying in parts makes the worst outcome smaller, at the price of a few percent at the median. How investing every month has done through real falls is in Investing monthly when the market falls, and you can test any monthly plan in the dollar cost averaging calculator.

Test yourself

You have $12,000. What has most often bought more S&P 500 shares since 1928?

How we calculated

S&P 500, purchases at the month's last close, from January 1928 to Nov 6, 2026, without dividends. Dividends would have favoured the lump sum, which owns more shares from the start.
Money waiting to be invested earns no interest here. With interest on it the lump sum's lead would have been somewhat smaller.
The start months overlap, so 1,175 start months are not as many independent outcomes.
Commissions, fees and taxes are not included.