The stock market is at all-time highs, and essentially every day the markets close at new record levels. There’s rarely been a day in recent memory where there hasn’t been a new record, and this is all great and exciting if you’re already invested, but what if you’re looking for opportunities?
How can you invest when things are so high, and do so in a smart way that’s actually going to offer good returns over time? There’s a fear among a lot of investors that when things are this good, there’s only so much more room to go up and much more of a likelihood of things going down.
The following are some investment tips you can use when the market is as high as it currently is.
When things are incredibly expensive there tends to be the concern that they’re overvalued, so what you can do rather than buying things that you see as inflated is to do some research and find new opportunities.
You might want to look in areas that are seen as somewhat unconventional such as penny stocks, and educate yourself beforehand.
It’s tough to invest in penny stocks because you need to understand the fundamental framework of how to do it well, and you’re going to be investing in areas where there’s a lot of volatility and risk, but you can do it.
Give It Time
No matter what the market looks like at any given moment, you’re going to make money over the long-term, and that’s the nature of the game.
If you can go into it with this thinking, rather than trying to time the market, you’re going to take some of the emotion and also the accompanying fear out of investing when things are so high, and could easily come crashing down at any moment.
Nothing in the stock market lasts forever, good or bad, and that’s an important thing to keep in mind as you’re developing your strategy.
Stagger Your Market Entry
A good approach right now if you have a lump sum you need to do something with, such as a year-end bonus, is to stagger your entry into the market. You can go the dollar-cost averaging route, and you can invest set amounts of money at particular intervals. Maybe you set it up to be a monthly thing, so you’re investing a set amount each month.
This gives you strong diversity in your timing, and it may give you more peace of mind and take the emotion out of investing the lump sum all at one time. Typically lump sum investments do tend to better when you’re looking at a historical trajectory, but that just may not be the best route for you at this particular time.
Finally, no matter what approach you take, just remember that you’re not investing for the next three months, six months or even the next year. You’re investing for the next several decades, so always keep that in perspective.
