Dollar Cost Averaging vs Lump Sum: Evidence from investing simulations on real data

Dollar Cost Averaging is a periodic investment of equal dollar amounts in stocks which allegedly can reduce (but not avoid) the risks of security investment. Even if some academic contributions questioned the alleged benefits, several professional investment advisors and websites keep on suggesting it. In this paper we use simulation to analyze Dollar Cost Averaging performance and compare its results to Lump Sum investment. We consider 30 international funds and 30 stocks to simulate investing over different period windows in order to assess whether this strategy is better than investing the whole available sum at time 0.