The Australian share market has climbed to a new record high this week, leaving some investors wondering whether it is the right time to invest — or if it is safer to wait for a pullback.
History shows that trying to time the market is a dangerous game. Instead of sitting on the sidelines, investors can take a smarter, more disciplined approach to keep building wealth even when markets are at their peak.
Here's how.
Step 1: Don't let record highs scare you
Markets hitting new highs isn't unusual — over the long term, the ASX has hit countless highs as the economy grows and company earnings rise. Avoid the temptation to treat a new peak as a signal to sell or stop investing.
The biggest risk isn't buying at a high; it is missing out on years of compounding by waiting for a dip that may never come.
Step 2: Focus on quality, not hype
In hot markets, lower-quality and speculative ASX stocks often get overbid. Instead, stick to businesses with strong fundamentals, sustainable earnings, and defensible competitive advantages.
Some ASX names worth considering in this category include:
- CSL Ltd (ASX: CSL), now trading well below its historical P/E multiple despite its positive long-term growth outlook.
- ResMed Inc (ASX: RMD), a global sleep disorder treatment leader with decades of growth ahead of it.
- Goodman Group (ASX: GMG), a property giant riding the data centre and logistics boom with a healthy balance sheet.
These companies are more likely to withstand future volatility while still delivering compounding returns over time.
Step 3: Use dollar-cost averaging
One way to take the emotion out of investing at market highs is dollar-cost averaging (DCT).
It is investing a set amount each month regardless of market levels.
This approach lets you buy more shares during market dips and fewer when prices are high, lowering your average cost over time. It is a proven way to smooth out the bumps in both bull and bear markets.
Step 4: Diversify across sectors and geographies
Even when ASX shares are booming, not every sector performs equally. Balancing your portfolio across industries like healthcare, resources, tech, and financials can reduce your reliance on any single theme.
In addition, going global with ASX ETFs like the iShares S&P 500 ETF (ASX: IVV) or the Betashares Nasdaq 100 ETF (ASX: NDQ) can help protect against local economic slowdowns and give exposure to high-growth industries beyond Australia.
Foolish takeaway
A record-breaking ASX doesn't mean it is time to stop investing.
By staying disciplined, focusing on quality companies, investing consistently, and diversifying, you can continue building long-term wealth — without trying to outguess the market.
