Furthermore, analysis by RBC Asset Management shows that major corrections \u2014 declines of more than 10% \u2014 occurred just 9% of the time one year after an S&P 500 all-time high, and became even less frequent over longer timeframes.<\/p>\n
![\"Source:](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2025\/08\/RBC.png\")
<\/p>\n
Source: Bloomberg, RBC GAM. Data as of January 1, 1950 to March 2024, in U.S. dollars.<\/p>\n
Put in a different way, imagine you invested $10,000 in the S&P 500 at its 2007 peak of 1,565 and added $1,000 every month after that. By the end of 2008, you’d be staring at a painful drawdown; a $26,000 investment would have fallen to around $16,000.<\/p>\n
But by staying the course, you\u2019d have seen the index:<\/p>\n
Recover in 2013
\nCrack 2,000 in 2014
\nHit 3,000 in 2019
\nThen 4,000 in 2021, 5,000 in 2024, and now 6,000 in 2025<\/p>\n
If you\u2019d tapped out in 2013, you would\u2019ve needed to wait seven years and time the COVID crash perfectly to re-enter at extremely attractive valuations, but even then, you’d be buying at a higher price than where you exited and missed the dividends along the way.\u00a0<\/p>\n
And if you decided to cut contributions along the way simply because markets were “too high” your returns would be lower. Indeed, during the past decade, 2022 was the only year when the S&P 500 didn’t set a single record high.<\/p>\n
By sticking with the plan, you would have contributed $222,000 over time and would now be sitting on a portfolio worth just over $850,000. That\u2019s an annualised return of around 13%, despite starting at the worst possible time.<\/p>\n
<\/p>\n
Source:\u00a0Of Dollars and Data \u2013 DCA calculator (Returns assume reinvestment of dividends but do not take into account trading costs and taxes).<\/p>\n
Of course, past performance doesn’t guarantee future results, and a market correction is always possible. But that’s the strength of a dollar-cost averaging strategy – it smooths out your entry points by buying through the highs, lows, and everything in between. And as AMP\u2019s Shane Oliver often reminds us, markets have a long history of climbing the \u2018wall of worry\u2019.<\/a><\/p>\n Source: ASX, AMP As Warren Buffett once said:<\/p>\n “If you aren\u2019t willing to own a stock for 10 years, don\u2019t even think about owning it for 10 minutes.”<\/p>\n That said, not all caution is irrational.<\/p>\n A raging bull market can stir up excitement – and not always the rational kind. Some investors are falling into the trap of massively overweighting tech or\u00a0digital assets like Bitcoin, and chasing meme stocks like Krispy Kreme (NASDAQ: DNUT),\u00a0without fully appreciating the volatility these exposures can bring to a portfolio.<\/p>\n Personally, I believe tech is impossible to ignore. AI is a genuine productivity revolution – it\u2019s everywhere, and it\u2019s consistently driving strong results for giants like Microsoft, Meta, and NVIDIA (NASDAQ: NVDA). Yes, P\/Es are exploding. But so are profits and free cash flows.<\/p>\n Still, tech isn\u2019t the whole picture.<\/p>\n Investors who overlook value and income do so at their own peril. Sectors like A-REITs, the ASX 200, and even corporate bonds are offering solid yields without the eye-watering valuations, and the value trade has worked well so far this year, underscoring the benefits of diversification across multiple strategies.<\/p>\n It’s business as usual<\/p>\n In the end, all-time highs may feel uncomfortable. But based on the data, they aren\u2019t necessarily a red flag. And one of my FIRE group\u2019s more seasoned voices reminded us:<\/p>\n \u201cWe all work, we all contribute regularly to super or pension funds. That capital is mandated to be invested in growth assets. It doesn\u2019t sit in cash waiting for a correction.\u201d<\/p>\n And with that, the bears retreated back to the woods.<\/p>\n Never miss an update<\/p>\n<\/p>\n
\nFocus on a good portfolio
\nRather than halt contributions altogether, the bigger consideration is whether your portfolio still reflects your goals, time horizon, and risk tolerance. If you’re investing for the next 20 or 30 years, does it really make sense to let short-term market movements dictate your moves?<\/p>\n