Available in full at the start. Both columns begin from this figure.
Equal instalments, each deployed at the start of its month.
Annualized and constant. Converted to a monthly rate geometrically.
What the undeployed part of the total earns while it waits.
Difference is the single placement less the instalments. Both run at one constant rate, so it measures time in the market and nothing else: at a positive rate above the idle rate the single placement finishes ahead by construction.
Hypothetical illustration. Both routes run at one constant rate, so the comparison measures time in the market and nothing else. Actual returns vary period to period and may be negative, and the order in which they arrive is exactly what a constant rate removes.
Instalments are deployed at the start of each month. Does not account for taxes, commissions, bid-ask spreads or inflation.
Dollar-cost averaging spreads a total across equal instalments instead of placing it all at once. This projects both, from the same starting capital and at one constant rate, so the only difference between the two lines is how long each dollar spends invested.
$12,000 spread over 12 monthly instalments at a constant 8% a year finishes at about $12,514. The same $12,000 placed at month zero finishes at $12,960. The $446 gap is the return the instalments gave up by sitting in cash, which here earns nothing.
Reading a constant-rate model as a claim about markets. At one fixed positive rate the single placement always wins, because it is invested longer. A real sequence of returns is not fixed, and this model has no view on which sequence arrives.