By all accounts, it's been a phenomenal year to have been invested in most asset classes in 2025 so far. This year has seen records tumble like Jenga blocks. We've seen new all-time highs for the Australian S&P/ASX 200 Index (ASX: XJO), the American S&P 500 Index (SP: .INX), Bitcoin (CRYPTO: BTC), and the price of gold.
Not to mention a myriad of ASX and US stocks.
This has been fantastic for anyone already invested in these assets. But it complicates matters for those who have money on the sidelines, ready to invest. Many, if not most, high-quality businesses on both the ASX 200 and the S&P 500 are now trading at levels that most experts might call elevated.
Commonwealth Bank of Australia (ASX: CBA) is arguably the local poster child for this problem. However, we have seen shares ranging from National Australia Bank Ltd (ASX: NAB) and Telstra Group Ltd (ASX: TLS) to Coles Group Ltd (ASX: COL) and Wesfarmers Ltd (ASX: WES) climb to previously unseen heights and valuations in 2025.
Ditto with S&P 500 stocks like Nvidia Corp (NASDAQ: NVDA), Berkshire Hathaway Inc (NYSE: BRK.A)(NYSE: BRK.B), Microsoft Corporation (NASDAQ: MSFT), and Amazon.com Inc (NASDAQ: AMZN).
So if I had $5,000 to invest in assets today, where would I turn to?
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S&P 500? How I would invest $5,000 today
To start with, I would still happily buy broad-market index funds, such as the iShares S&P 500 ETF (ASX: IVV) or the Vanguard Australian Shares Index ETF (ASX: VAS). These investments, which represent entire stock markets, are still expensive by historical standards.
But I believe buying small chunks of them at regular intervals using a dollar-cost averaging strategy is a sound way to navigate the current investing environment. Saying that, anyone who likes the sound of this strategy has to commit to a plan. It doesn't work effectively if you only buy shares when you feel comfortable about investing.
As Warren Buffett once said, "Keep buying it through thick and thin, and especially through thin".
Aside from index funds, I still think there are stocks out there, on both the S&P 500 and the ASX 200, that present good value. Investors need to do their homework to find them, though.
Yesterday, I discussed a few S&P 500 stocks that I think still represent compelling buying opportunities at current valuations. Those included Google-owner Alphabet Inc (NASDAQ: GOOG)(NASDAQ: GOOGL), Coca-Cola Co (NYSE: KO), Visa Inc (NYSE: V), McDonald's Corp (NYSE: MCD), and McCormick & Company Inc (NYSE: MKC).
Here on the ASX, the VanEck Morningstar Wide Moat ETF (ASX: MOAT) and MFF Capital Investments Ltd (ASX: MFF) still look interesting. As does Woolworths Group Ltd (ASX: WOW) for the long-term investor.
