Was Dollar Cost Averaging Better Than Lump Sum Investing During the 2008 Financial Crisis?

Lump sum investing means investing with a single amount while the dollar cost averaging takes the same amount of money, breaks it into smaller amounts and invest them over a period of time.

In order to find out which was better during the 2008 housing crisis, I have simulated the results of both investing methods with the following setup:

The simulated investment instrument is the SPDR S&P 500 ETF(SPY) which is a good proxy for S&P 500 index.

SPY's daily closing values are used.

To simulate actual returns and for calculation purposes, SPY's dividends will be reinvested at the ex-dividend dates.

To simulate long to short term investment results, terms of 1-year, 5-year and 10-year are simulated.

The dollar cost averaging method will invest $1k each month while the lump sum method will invest all the money on Oct 9, 2007 when SPY reached its top.

Investing at the Top of 2008 Housing Bubble

SPY reached its high on Oct 9, 2007 at $156.48.

Results Comparison Over 1 Year

Total investment is $12k.

Dollar cost averaging end amount is $8293.43, which has a -30.89% return.

Lump sum investing end amount is $7,122.33, which has a -40.65% return.

Dollar cost averaging is better.

Dollar Cost Averaging Result Calculation

Date	Price	Total Shares	Total Price
Oct 9, 2007	$156.48	6.391	$1,000.00
Nov 09, 2007	$145.14	13.281	$1,927.60
Dec 10, 2007	$152.08	19.856	$3,019.70
Dec 21, 2007	$148.13	19.960*	$2,956.67
Jan 09, 2008	$106.97	29.308	$3,135.08
Feb 08, 2008	$133.07	36.823	$4,900.04
Mar 10, 2008	$128.00	44.636	$5,713.41
Mar 20, 2008	$132.08	44.853*	$5,924.18
Apr 09, 2008	$135.83	52.215	$7,092.36
May 09, 2008	$138.90	59.414	$8,252.60
Jun 09, 2008	$136.62	66.734	$9,117.20
Jun 20, 2008	$131.58	67.073*	$8,825.47
Jul 09, 2008	$124.79	75.086	$9,369.98
Aug 08, 2008	$129.37	82.816	$10,713.91
Sep 09, 2008	$123.22	90.932	$11,204.64
Sep 19, 2008	$124.12	91.438	$11,349.28
Oct 09, 2008	$90.70	91.438	$8,293.43

Lump Sum Investing Result Calculation

Date	Price	Total Shares	Total Price
Oct 9, 2007	$156.48	76.687	$12,000
Dec 21, 2007	$112.89	77.213*	$8,716.58
Mar 20, 2008	$132.08	77.588*	$10,247.82
Jun 20, 2008	$131.58	77.982*	$10,260.87
Sep 19, 2008	$124.12	78.416*	$9,732.99
Oct 09, 2008	$90.70	78.416	$7,112.33

Results Comparison Over 5 Year

Total investment is $60k.

• Dollar cost averaging end amount is $79,161.33, which has a 31.94% return.
• Lump sum investing end amount is $61,519.76, which has a 2.53% return.
• Dollar cost averaging is better.

Dollar Cost Averaging Result Calculation

Date	Price	Total Shares	Total Price
Oct 9, 2007	$156.48	6.391	$1,000.00
Nov 09, 2007	$145.14	13.281	$1,927.60
Dec 10, 2007	$152.08	19.856	$3,019.70
Dec 21, 2007	$148.13	19.960*	$2,956.67
Jan 09, 2008	$106.97	29.308	$3,135.08
Feb 08, 2008	$133.07	36.823	$4,900.04
Mar 10, 2008	$128.00	44.636	$5,713.41
Mar 20, 2008	$132.08	44.853*	$5,924.18
Apr 09, 2008	$135.83	52.215	$7,092.36
May 09, 2008	$138.90	59.414	$8,252.60
Jun 09, 2008	$136.62	66.734	$9,117.20
Jun 20, 2008	$131.58	67.073*	$8,825.47
Jul 09, 2008	$124.79	75.086	$9,369.98
Aug 08, 2008	$129.37	82.816	$10,713.91
Sep 09, 2008	$123.22	90.932	$11,204.64
Sep 19, 2008	$124.12	91.438*	$11,349.28
Oct 09, 2008	$90.70	102.463	$9,293.39
Nov 10, 2008	$92.63	113.259	$10,491.18
Dec 09, 2008	$89.50	124.432	$11,136.66
Dec 19, 2008	$88.19	125.446*	$11,063.08
Jan 09, 2009	$89.09	136.671	$12,176.02
Feb 09, 2009	$87.10	148.152	$12,904.04
Mar 09, 2009	$68.11	162.834	$11,090.62
Mar 20, 2009	$76.71	164.025*	$12,582.36
Apr 09, 2009	$85.81	175.679	$15,075.01
May 08, 2009	$92.98	186.434	$17,334.63
Jun 09, 2009	$94.64	197.228	$18,665.66
Jun 19, 2009	$92.04	198.338*	$18,255.03
Jul 09, 2009	$88.17	209.680	$18,487.49
Aug 10, 2009	$100.99	219.582	$22,175.59
Sep 09, 2009	$103.73	229.222	$23,777.20
Sep 18, 2009	$106.72	230.313	$24,579.00
Oct 09, 2009	$107.26	239.636	$25,703.36
Nov 09, 2009	$109.57	248.763	$27,256.96
Dec 09, 2009	$110.02	257.852	$28,368.88
Dec 18, 2009	$110.21	259.232	$28,569.96
Jan 08, 2010	$114.57	267.960	$30,700.18
Feb 09, 2010	$107.22	277.287	$29,730.71
Mar 09, 2010	$114.46	286.024	$32,738.31
Mar 19, 2010	$115.97	287.208*	$33,307.51
Apr 09, 2010	$119.55	295.573	$35,335.75
May 10, 2010	$116.16	304.182	$35,33.78
Jun 09, 2010	$106.05	313.612	$33,258.55
Jun 18, 2010	$111.73	315.102*	$35,206.65
Jul 09, 2010	$107.96	324.365	$35,018.45
Aug 09, 2010	$112.99	333.215	$37,649.96
Sep 09, 2010	$110.92	342.231	$37,960.26
Sep 17, 2010	$112.49	344.062*	$38,703.53
Oct 08, 2010	$116.54	352.642	$41,096.90
Nov 09, 2010	$121.61	360.865	$43,884.79
Dec 09, 2010	$123.76	368.945	$45,660.63
Dec 17, 2010	$124.30	370.883*	$46,100.76
Jan 10, 2011	$126.98	378.758	$48,094.69
Feb 09, 2011	$132.27	386.870	$51,171.29
Mar 09, 2011	$132.39	394.423	$52,217.66
Mar 18, 2011	$127.76	396.130*	$50,609.57
Apr 08, 2011	$132.86	403.657	$53,629.87
May 09, 2011	$134.72	411.080	$55,380.70
Jun 09, 2011	$129.40	418.808	$54,193.76
Jun 17, 2011	$127.05	420.878*	$53,472.55
Jul 08, 2011	$134.40	428.318	$57,565.94
Aug 09, 2011	$117.48	436.830	$51,318.79
Sep 09, 2011	$115.92	445.457	$51,637.38
Sep 16, 2011	$121.52	447.748*	$54,410.34
Oct 10, 2011	$119.58	456.111	$54,541.75
Nov 09, 2011	$123.16	464.231	$57,174.69
Dec 09, 2011	$126.05	472.164	$59,516.27
Dec 16, 2011	$121.59	475.154*	$57,773.97
Jan 09, 2012	$128.02	482.965	$61,829.18
Feb 09, 2012	$135.36	490.353	$66,374.18
Mar 09, 2012	$137.57	497.622	$68,457.86
Mar 16, 2012	$140.30	499.800*	$70,121.94
Apr 09, 2012	$138.22	507.035	$70,082.38
May 09, 2012	$135.74	514.402	$69,824.93
Jun 08, 2012	$133.10	521.915	$69,466.89
Jun 15, 2012	$134.14	524.592*	$70,368.77
Jul 06, 2012	$135.49	531.973	$72,077.02
Aug 09, 2012	$140.61	539.085	$75,800.74
Sep 10, 2012	$143.51	546.053	$78,364.07
Sep 21, 2012	$145.87	548.969	$80,078.11
Oct 09, 2012	$144.20	548.969	$79,161.33

Lump Sum Investing Result Calculation

Date	Value	Total Shares	Total Value
Oct 9, 2007	$156.48	383.436	$60,000.00
Dec 21, 2007	$148.13	385.442*	$57,095.52
Mar 20, 2008	$132.08	387.316*	$51,156.70
Jun 20, 2008	$131.58	389.285*	$51,222.12
Sep 19, 2008	$124.12	391.452*	$48,587.02
Dec 19, 2008	$88.19	394.643*	$34,803.57
Mar 20, 2009	$76.71	397.529*	$30,494.45
Jun 19, 2009	$92.04	399.766*	$36,794.46
Sep 18, 2009	$106.72	401.669*	$42,866.12
Dec 18, 2009	$110.21	403.819*	$44,504.89
Mar 19, 2010	$115.97	405.490*	$47,024.68
Jun 18, 2010	$111.73	407.417*	$45,520.70
Sep 17, 2010	$112.49	409.597*	$46,075.57
Dec 17, 2010	$124.30	411.749*	$51,180.40
Mar 18, 2011	$127.76	413.531*	$52,832.72
Jun 17, 2011	$127.05	415.575*	$52,798.80
Sep 16, 2011	$121.52	417.712*	$50,760.36
Dec 16, 2011	$121.59	420.357*	$51,111.21
Mar 16, 2012	$140.30	422.197*	$59,234.24
Jun 15, 2012	$134.14	424.362*	$56,923.92
Sep 21, 2012	$145.87	426.628	$62,232.22
Oct 09, 2012	$144.20	426.628	$61,519.76

Results Comparison Over 10 Year

Total investment is $120k.

• Dollar cost averaging end amount is $237,984.16, which has a 98.32% return.
• Lump sum investing end amount is $240,087.89.19, which has a 100.07% return.
• Lump sum investing is better.

Dollar Cost Averaging Result Calculation

Date	Price	Total Shares	Total Price
Oct 9, 2007	$156.48	6.391	$1,000.00
Nov 09, 2007	$145.14	13.281	$1,927.60
Dec 10, 2007	$152.08	19.856	$3,019.70
Dec 21, 2007	$148.13	19.960*	$2,956.67
Jan 09, 2008	$106.97	29.308	$3,135.08
Feb 08, 2008	$133.07	36.823	$4,900.04
Mar 10, 2008	$128.00	44.636	$5,713.41
Mar 20, 2008	$132.08	44.853*	$5,924.18
Apr 09, 2008	$135.83	52.215	$7,092.36
May 09, 2008	$138.90	59.414	$8,252.60
Jun 09, 2008	$136.62	66.734	$9,117.20
Jun 20, 2008	$131.58	67.073*	$8,825.47
Jul 09, 2008	$124.79	75.086	$9,369.98
Aug 08, 2008	$129.37	82.816	$10,713.91
Sep 09, 2008	$123.22	90.932	$11,204.64
Sep 19, 2008	$124.12	91.438*	$11,349.28
Oct 09, 2008	$90.70	102.463	$9,293.39
Nov 10, 2008	$92.63	113.259	$10,491.18
Dec 09, 2008	$89.50	124.432	$11,136.66
Dec 19, 2008	$88.19	125.446*	$11,063.08
Jan 09, 2009	$89.09	136.671	$12,176.02
Feb 09, 2009	$87.10	148.152	$12,904.04
Mar 09, 2009	$68.11	162.834	$11,090.62
Mar 20, 2009	$76.71	164.025*	$12,582.36
Apr 09, 2009	$85.81	175.679	$15,075.01
May 08, 2009	$92.98	186.434	$17,334.63
Jun 09, 2009	$94.64	197.228	$18,665.66
Jun 19, 2009	$92.04	198.338*	$18,255.03
Jul 09, 2009	$88.17	209.680	$18,487.49
Aug 10, 2009	$100.99	219.582	$22,175.59
Sep 09, 2009	$103.73	229.222	$23,777.20
Sep 18, 2009	$106.72	230.313	$24,579.00
Oct 09, 2009	$107.26	239.636	$25,703.36
Nov 09, 2009	$109.57	248.763	$27,256.96
Dec 09, 2009	$110.02	257.852	$28,368.88
Dec 18, 2009	$110.21	259.232	$28,569.96
Jan 08, 2010	$114.57	267.960	$30,700.18
Feb 09, 2010	$107.22	277.287	$29,730.71
Mar 09, 2010	$114.46	286.024	$32,738.31
Mar 19, 2010	$115.97	287.208*	$33,307.51
Apr 09, 2010	$119.55	295.573	$35,335.75
May 10, 2010	$116.16	304.182	$35,33.78
Jun 09, 2010	$106.05	313.612	$33,258.55
Jun 18, 2010	$111.73	315.102*	$35,206.65
Jul 09, 2010	$107.96	324.365	$35,018.45
Aug 09, 2010	$112.99	333.215	$37,649.96
Sep 09, 2010	$110.92	342.231	$37,960.26
Sep 17, 2010	$112.49	344.062*	$38,703.53
Oct 08, 2010	$116.54	352.642	$41,096.90
Nov 09, 2010	$121.61	360.865	$43,884.79
Dec 09, 2010	$123.76	368.945	$45,660.63
Dec 17, 2010	$124.30	370.883*	$46,100.76
Jan 10, 2011	$126.98	378.758	$48,094.69
Feb 09, 2011	$132.27	386.870	$51,171.29
Mar 09, 2011	$132.39	394.423	$52,217.66
Mar 18, 2011	$127.76	396.130*	$50,609.57
Apr 08, 2011	$132.86	403.657	$53,629.87
May 09, 2011	$134.72	411.080	$55,380.70
Jun 09, 2011	$129.40	418.808	$54,193.76
Jun 17, 2011	$127.05	420.878*	$53,472.55
Jul 08, 2011	$134.40	428.318	$57,565.94
Aug 09, 2011	$117.48	436.830	$51,318.79
Sep 09, 2011	$115.92	445.457	$51,637.38
Sep 16, 2011	$121.52	447.748*	$54,410.34
Oct 10, 2011	$119.58	456.111	$54,541.75
Nov 09, 2011	$123.16	464.231	$57,174.69
Dec 09, 2011	$126.05	472.164	$59,516.27
Dec 16, 2011	$121.59	475.154*	$57,773.97
Jan 09, 2012	$128.02	482.965	$61,829.18
Feb 09, 2012	$135.36	490.353	$66,374.18
Mar 09, 2012	$137.57	497.622	$68,457.86
Mar 16, 2012	$140.30	499.800*	$70,121.94
Apr 09, 2012	$138.22	507.035	$70,082.38
May 09, 2012	$135.74	514.402	$69,824.93
Jun 08, 2012	$133.10	521.915	$69,466.89
Jun 15, 2012	$134.14	524.592*	$70,368.77
Jul 06, 2012	$135.49	531.973	$72,077.02
Aug 09, 2012	$140.61	539.085	$75,800.74
Sep 10, 2012	$143.51	546.053	$78,364.07
Sep 21, 2012	$145.87	548.969*	$80,078.11
Oct 09, 2012	$144.20	555.904	$80,161.36
Nov 09, 2012	$138.16	563.142	$77,803.70
Dec 10, 2012	$142.47	570.161	$81,230.84
Dec 21, 2012	$142.79	574.242*	$81,996.12
Jan 09, 2013	$145.92	581.095	$84,793.38
Feb 08, 2013	$151.80	587.683	$89,210.28
Mar 08, 2013	$155.44	594.116	$92,349.39
Mar 15, 2013	$155.83	596.762*	$92,993.42
Apr 09, 2013	$156.75	603.142	$92,733.08
May 09, 2013	$162.88	609.281	$99,848.97
Jun 10, 2013	$164.80	615.349	$101,409.52
Jun 21, 2013	$159.07	618.595*	$98,399.91
Jul 09, 2013	$165.13	624.651	$103,148.62
Aug 09, 2013	$169.31	630.557	$106,759.61
Sep 09, 2013	$167.63	636.523	$106,700.35
Sep 20, 2013	$170.72	639.647*	$109,200.54
Oct 09, 2013	$165.60	645.686	$106,925.60
Nov 08, 2013	$177.29	651.326	$115,473.59
Dec 09, 2013	$181.40	656.839	$119,150.59
Dec 20, 2013	$181.56	660.384*	$119,899.32
Jan 09, 2014	$183.64	665.829	$122,272.84
Feb 10, 2014	$180.01	671.384	$120,855.83
Mar 10, 2014	$188.16	676.699	$127,327.68
Mar 21, 2014	$186.20	679.697*	$126,559.58
Apr 09, 2014	$187.09	685.042	$128,164.51
May 09, 2014	$187.96	690.362	$129,760.44
Jun 09, 2014	$195.58	695.475	$136,027.96
Jun 20, 2014	$195.94	698.801*	$136,923.07
Jul 09, 2014	$197.12	703.874	$138,747.64
Aug 08, 2014	$193.24	709.049	$137,016.63
Sep 09, 2014	$199.32	714.066	$142,327.64
Sep 19, 2014	$200.70	717.407*	$141,976.58
Oct 09, 2014	$192.74	722.595	$139,272.96
Nov 10, 2014	$203.98	727.497	$148,394.84
Dec 09, 2014	$206.47	732.340	$151,206.24
Dec 19, 2014	$206.52	736.365*	$152,074.10
Jan 09, 2015	$204.25	741.261	$151,402.56
Feb 09, 2015	$204.63	746.148	$152,684.26
Mar 09, 2015	$208.36	750.947	$156,467.32
Mar 20, 2015	$210.41	754.270*	$158,705.95
Apr 09, 2015	$208.90	759.057	$158,567.01
May 08, 2015	$211.62	763.782	$161,631.55
Jun 09, 2015	$208.45	768.579	$160,210.29
Jun 19, 2015	$210.81	772.334*	$162,815.73
Jul 09, 2015	$204.90	777.214	$15,821.15
Aug 10, 2015	$210.57	781.963	$164,657.95
Sep 09, 2015	$194.79	787.097	$153,318.62
Sep 18, 2015	$195.45	791.257*	$154,651.18
Oct 09, 2015	$201.33	796.224	$160,303.78
Nov 09, 2015	$208.08	801.030	$166,678.32
Dec 09, 2015	$205.34	805.900	$165,483.51
Dec 18, 2015	$200.02	810.783*	$162,172.82
Jan 08, 2016	$191.92	815.994	$156,605.57
Feb 09, 2016	$185.43	821.387	$152,309.79
Mar 09, 2016	$199.38	826.403	$164,768.23
Mar 18, 2016	$204.38	830.649*	$169,768.04
Apr 08, 2016	$204.50	835.539	$170,867.73
May 09, 2016	$205.89	840.396	$172,188.74
Jun 09, 2016	$212.08	845.111	$179,231.14
Jun 17, 2016	$206.52	849.522*	$175,443.28
Jul 08, 2016	$212.65	854.225	$181,650.95
Aug 09, 2016	$218.18	858.808	$187,374.73
Sep 09, 2016	$213.28	863.497	$184,166.64
Sep 16, 2016	$213.37	867.876*	$185,178.70
Oct 10, 2016	$216.16	872.502	$188,600.03
Nov 09, 2016	$216.38	877.123	$189,791.87
Dec 09, 2016	$226.51	881.538	$199,677.17
Dec 16, 2016	$225.04	886.391*	$199,473.43
Jan 09, 2017	$226.46	890.807	$201,732.15
Feb 09, 2017	$230.60	895.143	$206,419.98
Mar 09, 2017	$236.86	899.365	$213,023.59
Mar 17, 2017	$237.03	903.285*	$214,105.64
Apr 10, 2017	$235.34	907.534	$213,579.05
May 09, 2017	$239.44	911.710	$218,299.84
Jun 09, 2017	$243.41	915.818	$222,919.26
Jun 16, 2017	$242.64	920.283*	$222,297.47
Jul 10, 2017	$242.37	924.409	$224,049.01
Aug 09, 2017	$247.25	928.453	$229,560.00
Sep 08, 2017	$246.58	932.508	$229,937.82
Sep 15, 2017	$249.19	937.130*	$223,523.42
Oct 09, 2017	$253.95	937.130	$237,984.16

Lump Sum Investing Result Calculation

Date	Price	Total Shares	Total Price
Oct 09, 2007	$156.48	766.871	$120,000.00
Dec 21, 2007	$148.13	770.883*	$114,190.90
Mar 20, 2008	$132.08	774.630*	$102,313.13
Jun 20, 2008	$131.58	778.568*	$102,443.98
Sep 19, 2008	$124.12	782.902*	$97,173.80
Dec 19, 2008	$88.19	789.285*	$69,607.04
Mar 20, 2009	$76.71	795.057*	$60,988.82
Jun 19, 2009	$92.04	799.532*	$73,588.93
Sep 18, 2009	$106.72	803.338*	$85,732.23
Dec 18, 2009	$110.21	807.639*	$89,009.89
Mar 19, 2010	$115.97	811.036*	$94,055.84
Jun 18, 2010	$111.73	814.890*	$91,047.66
Sep 17, 2010	$112.49	819.251*	$92,157.54
Dec 17, 2010	$124.30	823.555*	$102,367.89
Mar 18, 2011	$127.76	827.120*	$102,672.85
Jun 17, 2011	$127.05	831.208*	$105,604.98
Sep 16, 2011	$121.52	835.483*	$101,527.89
Dec 16, 2011	$121.59	840.774*	$102,229.71
Mar 16, 2012	$140.30	844.454*	$118,476.90
Jun 15, 2012	$134.14	848.785*	$113,856.02
Sep 21, 2012	$145.87	853.318*	$124,473.50
Dec 21, 2012	$142.79	859.426*	$122,717.44
Mar 15, 2013	$155.83	863.254*	$134,520.87
Jun 21, 2013	$159.07	867.807*	$138.042.06
Sep 20, 2013	$170.72	872.067*	$148,879.28
Dec 20, 2013	$181.56	876.774*	$159,187.09
Mar 21, 2014	$186.20	880.659*	$163,978.71
Jun 20, 2014	$195.94	884.870*	$173,381.43
Sep 19, 2014	$200.70	889.010*	$178,424.31
Dec 19, 2014	$206.52	893.896*	$184,607.40
Mar 20, 2015	$210.41	897.851*	$188,916.83
Jun 19, 2015	$210.81	902.238*	$190,200.79
Sep 18, 2015	$195.45	907.007*	$177,274.52
Dec 18, 2015	$200.02	912.503*	$182,518.85
Mar 18, 2016	$204.38	917.191*	$187,455.50
Jun 17, 2016	$206.52	921.979*	$190,407.10
Sep 16, 2016	$213.37	926.654*	$197,720.16
Dec 16, 2016	$225.04	932.126*	$209,765.64
Mar 17, 2017	$237.03	936.188*	$221,904.64
Jun 16, 2017	$242.64	940.752*	$228,264.07
Sep 15, 2017	$249.19	945.414*	$235,587.71
Oct 09, 2017	$253.95	945.414	$240,087.89

Conclusion

It took about 5 years to recover all the loss if lump sum investing in SPY at the high before the 2008 housing bubble crisis.

The lump sum investing result beats the dollar cost averaging result if investing for 10 years, because the dividend reinvestment of the lump sum investing creates enough compounding effects.