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3 investments for an ASX at all-time highs

Well, you might have heard that both the S&P/ASX 200 (Index: ^AXJO)(ASX: XJO) and the ALL ORDINARIES (Index: ^AXAO)(ASX: XAO) have finally broken the record high they both set back in July. Yesterday, the ASX 200 closed at 6,864 points, while the All Ords finished up at 6,965.6 – just shy of the psychologically important 7,000 level.

Before then (for some context), markets were still going off the high watermark set back in 2007, just before the GFC.

But as many investors would know, the golden rule of the stock market is always ‘buy low, sell high’. That’s a bit tricky to do when markets have never been higher.

Still, it’s important not to become despondent at the lack of ‘buy low’ opportunities. After all, it’s a great time to already have shares in the market.

So here are 3 investments you can make even whilst markets are at their current levels.

Cash

Whilst cash is never a good investment over the long-term, I think now is the time to be building up some cash reserves if you haven’t already. Although a high stock market represents lots of built-up wealth, it’s also a time of maximum risk (remember, the last pre-2019 high was in 2007).

Thus, I think having a decent chunk of capital in cash is prudent at this time, so you can take advantage of any future dips or corrections that may come our way.

Index Funds

If you’ve already got a decent amount of cash set aside, think about buying into an index fund like the iShares Core S&P/ASX 200 ETF (ASX: IOZ). If everything’s expensive, you may as well buy the lot and get a trailing 4.52% dividend yield in the process. An index fund like IOZ is also a great way to add some diversification if you’re got a heavily concentrated portfolio as well.

You could even branch out and buy an international index fund like the Vanguard MSCI Index International Shares ETF (ASX: VGS) if you want some real variety.

Keep looking for bargains

No matter what the overall market is doing, there are always going to be beaten down companies worth a second look. If you’re a crazy-brave dividend investor, you might find some value in the ASX banks at the moment – even Westpac Banking Corp (ASX: WBC) if you’re feeling lucky.

Or maybe you’d just like to lock in a solid yield and go with Transurban Group (ASX: TCL). No matter your own style, if you keep looking where no one else wants to go, you might just find something worth buying today.

Foolish takeaway

In my opinion, the worst thing to do in this kind of market is to get caught up in all the exuberance and make silly decisions. Although it’s hard being all cashed up with no place to go, patience and prudence are your two best friends in this kind of market, so use them well and you’ll be ok in the long run!

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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Transurban Group. The Motley Fool Australia has recommended Vanguard MSCI Index International Shares ETF. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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