Where should you invest your hard-earned money in a stock market close to record highs? That's the question confronting many ASX investors as we approach the back end of 2024.
The performance of the S&P/ASX 200 Index (ASX: XJO) over the year has no doubt been welcomed by many investors. Since January, the ASX 200 has gained a rosy 7.02%, a return that you could boost by another three percentage points or so to account for dividends. Those returns are despite the dip the markets have taken over Wednesday and Thursday's sessions.
That's a great return, historically speaking, for ASX investors and has elicited multiple new all-time highs for the ASX 200 over the year so far.
By extension, these gains probably mean that most ASX investors have seen their portfolios grow in value, perhaps substantially, over 2024.
But higher stock prices can be a double-edged sword. While returns are great, many investors only like to buy shares when they are looking relatively cheap. With these rising markets, cheap shares are tangibly few and far between.
Slews of blue chip ASX 200 shares, including Commonwealth Bank of Australia (ASX: CBA), National Australia Bank Ltd (ASX: NAB), Goodman Group (ASX: GMG) and Wesfarmers Ltd (ASX: WES), are more expensive today than they have been in years (and in some cases, ever).
So what is one to do?
Where to invest $10,000 into ASX 200 shares in a bullish market
Firstly, I think any investor can continue (or start) investing in broad-market index funds.
Your index fund of choice could be an ASX-based fund like the Vanguard Australian Shares Index ETF (ASX: VAS). It could also be an American or internationally-focused index fund, such as the iShare S&P 500 ETF (ASX: IVV) or the Vanguard MSCI Index International Shares ETF (ASX: VGS). Or a combination of the above.
Whatever your preferred index fund is, I think these investments still make for a great long-term investment, provided you're putting money away for the long haul.
Both the US and Australian stock markets have historically gone up far more than they have gone down. They have also never failed to exceed a previous all-time high. With these comforting facts in mind, you shouldn't be too concerned about investing more cash into these investments, even at near-record market highs today.
Secondly, I believe there are still bargains to be found in this bullish stock market.
Not all ASX shares have been lifted by the rising tides of the broader market.
Two prominent examples are BHP Group Ltd (ASX: BHP) and Woodside Energy Group Ltd (ASX: WDS). Despite these two stocks being some of the largest companies in the ASX, BHP has had 15.75% wiped from its share price over 2024. Woodside is down by more than 24%.
These companies may be nursing losses due to falling commodity prices. But if you know a thing or two about this corner of the market, this could well present a buying opportunity.
Looking for cheap ASX shares
But they aren't the only ones. I personally think both CSL Ltd (ASX: CSL) shares and Telstra Group Ltd (ASX: TLS) stock are looking potentially attractive.
CSL is still hovering under $300 a share, the level it has trended around for years now. That's despite posting some pleasing growth numbers back in its most recent earnings report.
Meanwhile, Telstra's present $3.81 share price offers income investors a dividend yield of 4.72% today, replete with full franking credits, which is far more than CBA currently has on the table.
The ASX 200 is driven by the performance of a handful of shares. Despite its latest highs, I believe there are plenty of bargains to be found right now.
