Indexing in bull market

[stellardoc1]

A new attending here.

I have been a WCI lurker from past several years but never had the income even to invest in index funds in the past. Now, since I can do it, I am hesitant due to a bull market.

What do the readers think about

- holding cash for now and investing in index funds when the market cools down a bit

- continue monthly or quarterly investing i.e. dollar cost average

- keep some cash now and consider other forms of real estate etc for the time being and jump in to the market when it is a bit bearish.

- any other brilliant ideas 

Similar conundrum for 529 as well.

FYI - I am maximizing my tax efficient accounts - backdoor Roth, 401K.

[Donnie]

People have been waiting for the bull market to "cool down" for the past 5 years.  If a 50% downturn the year after you invested the lump sum would permanently scar you causing you to avoid the market in the future, then DCA the lump sum amount over the next year or so.  RE and just about every other asset class is in a bull market too.  Sitting on cash is not a great idea unless you have a short term need for it.

[keng8554]

I believe one of the most reassuring things I have read, with reference to investing in a bull market, is in Malkiel's Random Walk. The chart demonstrating returns in the market over varying historical intervals showed that, at least in the past, if you held your money in the market for a 25 year interval you would receive positive returns. Maybe not when adjusted for inflation, but still. Even during the worst possible 25 year interval over the last 100 years, you could still see a positive return.

Even more reassuring is that this didn't include modern theory like value or dollar cost averaging, periodic rebalancing and diversified asset allocation.

I say invest as conservatively as you are comfortable. I really wanted to have an 80/20 allocation but this bull market has me scared in to a 65/35. In 10 years I may regret not catching the extra returns of the riskier portfolio or I may be elated that I partially shielded myself during the harshest and longest bear market to date. However, being very early in my career like yourself, the best thing that could happen to our portfolios is a hard deep crash during our best earning years.

Accept that you don't know which will be true and pick an allocation that allows you to sleep at night.