How to navigate record-high markets

For some of you, it may feel like history is repeating itself—interest in the markets and investing waxes and wanes over the years as the markets fluctuate. But our principles are time-tested to help investors build and hold portfolios for the long-term across all market conditions. At Vanguard, we’re always excited to welcome new investors—the second best time to start investing is today—and encourage our shareholders to make decisions based on sound, time-tested investing principles: goals, balance, cost, and discipline.

• Construct clear, fitting goals. Every investor should be intentional with their investment decisions. Creating measurable goals within a realistic reach means you’re already setting yourself up for success in the long run. And when it comes to investing in a hot market, ask yourself: “Does this decision align with my current and future goals?”
• Keep it balanced. While you can’t predict what the market will do in the future, you can offset risk with a diversified portfolio. Your asset allocation should both align with your goals and strike a balance between risk and reward. Simply put, your portfolio holdings should reflect your comfort level with risk while providing an opportunity for returns.
• Look to cut costs as much as possible. Try to stick with low-cost investments so you can keep a bigger piece of your returns. Indexed investments—such as mutual funds—can be an easy, low-cost choice. Remember: When it comes to investing, don’t assume you get more if you pay more.
• Practice disciplined decision-making. Investing can be emotional, and it’s difficult not to react to drastic market increases and decreases. However, staying committed to your diversified portfolio and goals will help you stay on track. Trying to outguess the market rarely works—and can be costly to your portfolio. When market volatility hits, stay true to your vision and invest for long-term success.