Both the FTSE 100 and S&P 500 are sitting at or near their highest levels ever recorded, prompting many new investors to wonder if they have missed their chance.
Passive income hunters are enjoying what can only be described as a golden age, with record-breaking indices and dividend payments combining to reward retail investors handsomely.
The question many newcomers are asking is whether the best gains have already been captured, leaving little opportunity for those only just starting to build wealth.
The instinct to hesitate is understandable, given that the most repeated phrase in investing circles remains “buy low, sell high,” which makes elevated markets feel like the wrong entry point.
However, the data tells a very different story, and the reality for long-term investors is arguably the opposite of what conventional wisdom might suggest.
The S&P 500 has, on average over the last 80 years, hit a new all-time high approximately 17 to 18 times per year, making such milestones far less exceptional than they appear.
Research has shown that investing on days when markets reach all-time highs produces returns virtually identical to investing on random trading days throughout the year.
Japan’s experience offers a stark warning on the other side, with the Nikkei spending roughly 30 years in stagnation and delivering misery to investors who waited for the perfect moment to act.
BAE Systems (LSE: BA.), the defence manufacturer, serves as a compelling recent example of why all-time highs should not automatically deter investors from entering a position.
In 2022, BAE Systems broke past its previous high of 650p, a level at which many cautious investors would have chosen to hold back rather than commit fresh capital.
What followed was a sustained period of share price growth driven by increased global defence spending, with conflicts such as the war in Ukraine accelerating government budgets around the world.
BAE Systems shares now change hands at 2,230p, and that figure does not account for the dividends paid to shareholders throughout the intervening period, making the total return considerably larger.
The shares sit close to an all-time high once again today, yet the structural case for continued growth remains intact given the outlook for governmental defence spending in the years ahead.
A price-to-earnings ratio of 31 may give some investors pause, and the ethical considerations around the defence sector will inevitably deter a portion of the market from participating.
Nevertheless, BAE Systems is widely regarded as world class in its field, with a strong pipeline of contracts received in recent months underscoring the quality and demand for its products.
For investors willing to look past near-term valuation concerns, this could be a company that continues setting new all-time highs well into the future, making August 2026 a reasonable time to consider initiating a position.
The broader lesson is clear: waiting for markets to fall before building a passive income portfolio has historically been a losing strategy, and the current environment offers no compelling reason to break from that pattern.