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I am a Canadian, setting up an ETF-based RRSP in Questrade. Right now I have 70% of my portfolio in Canadian bonds, the other 30% of my portfolio is in cash, in USD. I am modelling my portfolio after the Canadian Couch Potato's conservative portfolio, so the 30% currently in cash was destined for equity. However, I can hardly stand the idea of buying equity right now, when it is at 52-week high nearly worldwide. In fact US equity (SPY) is at its all-time high. I am also worried that there is political risk in the US, to say it mildly.

In some ways I think it makes no difference, and that everyone that currently has equity and is not selling it is making the same choice I would be making (choosing to hold equity rather than something else). What do I do? Do I just bite the bullet and buy equity ETFs to round out my portfolio, despite the fact that the markets are at such a high?

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Your initial instincts are correct, that if the money was already invested a long time ago, it is the same outcome as if you invest it now. If the market is due for a correction, that will affect your portfolio the same whether you bought yesterday or ten years ago.

The only thing that changes when your $10,000 investment drops by 10% to $9,000 is the psychology of knowing that you paid $5,000 ten years ago verses $10,000 now. If you paid ten years ago, a $5,000 gain becomes a $4,000 gain, which isn't as good, but still feels good. If you paid yesterday, you see the whole $1,000 loss for what it is. It should be the same pain either way.

As long as you have appropriately accounted for the risks you perceive in the market, any market moves will affect you the same way no matter what the cost basis was. Hopefully by rebalancing your portfolio after a correction, you position yourself for greater gains during the subsequent recovery.

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Considering that the market has grown consistently in the macro sense (the regression curve slopes up) the market is often at an "all-time high". So the only reason you would not want to invest in equities is if you have a short investment horizon and think there is a correction soon, in which case you'd buy when equities are down relative to today.

The answer really depends on your investment horizon and how much risk you are willing to take in exchange for higher returns in the long run. The longer your investment horizon, the greater the chance that the market will gain over that time.

So unless you have a very short investment horizon and no appetite for risk, investing now or waiting for a correction (i.e. trying to "time the market") probably won't make a difference. Sure you might get lucky and be able to "buy the low", but you'll be just as likely to miss out on future gains while you wait for a drop.

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As above. Also realize that you are building an extremely conservative portfolio. Say you put in the 30% to stocks and it drops in half. Then at least you have that 70% in bonds to rebalance. You'd just move some of that money over and then be able to catch the wave as it rises again. But the key is making a plan and sticking to it.

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