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Monte Carlo Simulation for Lump Sum Investing and Dollar-Cost Averaging

 Which is better? Lump sum investing or dollar-cost averaging? O built this simulator to find out.

Assumptions:

  • Stock price follows geometric Brownian motion, or, stock return follows arithmetic Brownian motion.
  • The variables are investment duration, we call t, mean return and return standard deviation.
  • This simulator will run 1 time and show if one investing strategy beats the other.
  • The target asset has a innitial value of $100.
  • We will invest t*100 amount of money at time 0 for lump sum investing and $100 at each t.

Simulator

t:
Mean Return: %
Return Standard Deviation: %

Compare the Investment Result With Real Date

The previous app uses simulated stock prices to compare if lump sum investment givs a reutrn than dollar cost averaging. The following app uses actual SPY data. SPY tracks the SP500 index and it's an old ETF which we can use to model and compare the investment results from both investment strategies.
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