How to plan stock market investment when market is near all time high

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Consider the growth trajectory of assets over time. Just like real estate or gold, they repeatedly achieve new all-time highs. Similarly, when it comes to equities, aiming for returns in the range of 12-15% aligns with GDP growth and inflation. Essentially, this translates to a doubling of investment every six years. For instance, let's assume the current Sensex level is 70,000. If someone expects a 12% return from equities, it implicitly means that they anticipate the Sensex to reach approximately 140,000 in the next six years, and then double again from that level. In other words, their expectation is for the Sensex to reach around 280,000 in the following 12 years. To achieve such an expectation, hitting new all-time highs is an inherent part of the journey. Reaching all-time highs is not an anomaly but rather a natural consequence of sustained growth.

The focus should be on the numerical data rather than speculations. Over the past few years, the Sensex has consistently reached new all-time highs, rising from around 34,000 in 2017 to nearly 74,000 at present. This upward trajectory is a natural consequence of equity market growth. Therefore, there is no need to be overly concerned about all-time highs. Our analysis of the past 25 years' data reveals that investing at all-time highs still yielded an average return of 14% in the subsequent year. Furthermore, there was a 60% probability of returns exceeding 12% and a 50% chance of returns surpassing 15%. Historically, apprehensions about investing during all-time highs have proven to be unfounded.

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