In a prolonged bull market, lump-sum investing generally has what advantage over dollar-cost averaging?

• A. Lower risk
• B. Higher returns due to immediate market exposure
• C. Guaranteed returns
• D. Lower tax efficiency

Answer: (B)

In a rising market, getting your money invested all at once means it immediately participates in the market’s upside. Over a prolonged bull period, that early exposure compounds as prices keep climbing, leading to higher overall returns than spreading purchases out over time. Dollar-cost averaging delays some investments to later, so part of your money buys at higher prices as the market advances, which tends to reduce the upside you capture.

The other options don’t fit this scenario: lump-sum investing isn’t guaranteed and can carry more risk if the market declines after you invest, and tax efficiency isn’t the main factor driving the advantage in a bull market.