The decision this calculator is built around
If you come into a lump sum — an inheritance, a bonus, proceeds from a sale — and decide you want to invest it, a genuinely common question follows: invest it all in one go now, or split it into equal monthly amounts and drip-feed it in over time instead. This calculator compares both approaches directly for the same total amount and time horizon, at the same assumed rate of return.
Why investing it all now usually wins mathematically
If markets rise over your chosen time horizon (which, historically, diversified markets have tended to do more often than not over long periods, though never guaranteed for any specific period), investing the full amount immediately gives every pound the maximum possible time to compound. Spreading the same total in gradually means later contributions have progressively less time invested before the end of your horizon, which is why, under a rising-market assumption like the one this calculator uses, the lump sum route typically shows a higher projected value.
Why people still choose to spread it in anyway
The maths favouring a lump sum assumes markets rise steadily, but real markets don't move in a straight line, and investing a large sum right before a sharp fall can be psychologically difficult, even if the underlying assumption of it being correct on average over the long run still holds. Spreading a lump sum in over several months or a year, sometimes called drip-feeding or a form of pound-cost averaging, reduces the risk of investing everything right before a downturn, in exchange for a lower expected outcome under a rising-market scenario. It's a genuine trade-off between expected value and comfort with short-term risk, not a simple right-or-wrong choice.
What happens to money waiting to be invested
This calculator assumes the portion waiting to be invested earns nothing in the meantime, which understates the drip-feed option's real-world result — in practice, most people would hold that uninvested balance in an easy-access savings account earning some interest while it waits its turn, which narrows (though doesn't eliminate) the gap shown here. If you want to be more precise about that, our savings calculator can estimate what that waiting cash could itself earn over the same period.
There's no universally correct choice
Multiple published studies on this question, using historical market data across many overlapping periods, have generally found that investing a lump sum immediately outperforms drip-feeding it in more often than not, over long enough historical samples — but "more often than not" isn't "always", and your own tolerance for the emotional discomfort of a large investment falling in value shortly after you make it is a genuinely legitimate factor in the decision, not just an irrational one. Our risk tolerance guide and investment growth calculator can help you think through the wider decision alongside this specific comparison.
A worked example
Take the calculator's defaults: a £24,000 lump sum, a 10-year horizon, and an assumed 6% annual return. Investing the full £24,000 immediately projects to roughly £43,600 after 10 years. Spreading the same £24,000 evenly across all 120 months instead (£200 a month) projects to approximately £39,300 — a difference of about £4,300 in favour of investing it all upfront, purely because more of the money had more time to compound.
The gap narrows, but doesn't disappear, over a shorter horizon: run the same £24,000 over just 3 years instead of 10, and the lump sum projects to roughly £28,600 versus about £27,300 for the spread-in version — a smaller but still present advantage of around £1,300 for investing immediately, even over a much shorter timeframe.
A hybrid approach worth considering
Some investors split the difference deliberately: investing a portion of a lump sum immediately and drip-feeding the remainder in over a set number of months, which captures some of the mathematical advantage of investing early while reducing the risk of committing every pound right before a downturn. There's no fixed formula for the right split — it depends on how uncomfortable you'd genuinely feel investing the full amount in one go, weighed against how much of the statistical edge you're willing to give up in exchange for that peace of mind.
Frequently asked questions
Which option is 'right' for me?
There's no single right answer — it depends on your own comfort with the possibility of a near-term fall in value versus the mathematically higher expected outcome of investing immediately. Neither choice is unreasonable.
Over what period should I spread a lump sum if I choose to?
There's no fixed rule, but common approaches spread a lump sum over anywhere from six months to two years — spreading it over a much longer period starts to look more like simply not investing most of the money for a long time.
Does this calculator apply to pension contributions too?
The same principle applies to any lump sum, including a large pension contribution, though pension-specific tax relief timing and annual allowance rules can add extra considerations worth checking separately — see our pension tax relief guide.
Does the order I invest a lump sum in matter — all at once versus in two halves?
Splitting into two or three larger tranches rather than many small monthly amounts is a middle-ground approach some investors use, capturing more of the immediate-investing advantage while still reducing single-point timing risk somewhat.
Does this comparison change much in a falling market?
Yes — in a scenario where prices fall for a meaningful stretch before recovering, spreading contributions in gradually can outperform a lump sum, since later contributions buy in at lower prices, which is the opposite of the assumption this calculator's steady-growth model uses.
What if my lump sum came from selling a previous investment?
The same comparison still applies — the source of the lump sum doesn't change the underlying maths, though it's worth checking whether selling triggered a Capital Gains Tax liability that affects the actual amount you have left to reinvest, since only the net proceeds after any tax due are actually available to reinvest.