As the S&P 500 continues to reach new all-time highs, investors may question whether it's a smart move to buy stocks at these elevated levels. However, historical data suggests that investing during such periods can actually yield positive returns.

Since the beginning of 2024, the S&P 500 has achieved an impressive 20 intraday highs. This upward trend has led to concerns about potentially inflated stock valuations. Nonetheless, there are still attractive investment opportunities available in the market, even as it hits new peaks.

Looking back at history, it becomes evident that hitting one all-time high often paves the way for subsequent highs. In 1995, for example, the S&P 500 notched a remarkable 77 all-time highs, indicating the potential for continued upward momentum. Since January 19 of this year, the S&P 500 has already hit 19 additional all-time highs.

What's more, average returns after reaching new all-time highs are generally higher than overall average returns for the S&P 500. Fidelity's research reveals that one year after hitting a new all-time high, the S&P 500 total return averages 12.7% compared to 12.4% for other 12-month periods. Exiting a bear market and investing when the index makes a new high can potentially yield an average return of 14%.

Although the S&P 500 currently trades less than 8% above its January 19 high, historical averages indicate that there is still potential for further gains in the coming months. Long-term investors may find even more enticing prospects, as investing on the day stocks hit an all-time high between 1988 and 2020 resulted in total returns of 50.4% after three years and 78.9% after five years, outperforming the S&P 500's average returns of 39.1% and 71.4% respectively during the same period.

While valuations of the S&P 500 have become increasingly concentrated, with the top 10 components now accounting for over one-third of the index's value, investors can explore opportunities in smaller businesses within the index. One option is to consider investing in the Invesco S&P 500 Equal Weight ETF (RSP 0.00%), which provides exposure to the other 492 companies in the S&P 500. This equal weight index fund has historically outperformed the standard S&P 500 index, offering diversification and potentially superior returns.

For investors seeking a straightforward approach, a popular choice is the Vanguard S&P 500 ETF (VOO 0.02%). This broad-based index fund closely tracks the S&P 500 and boasts one of the lowest expense ratios in the industry. Historically, investing in such funds during all-time highs has delivered favorable returns.

In conclusion, while it's natural to be cautious about investing at all-time highs, historical data suggests that it can still be a fruitful strategy. Whether investors opt for individual stocks, standard index funds, or funds emphasizing smaller companies, the potential for wealth growth remains present. It's never too late to consider jumping into the market, even amidst continuous new highs.

Disclaimer: This article is based on historical data and should not be considered as financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making investment decisions.

Note: JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. The writer of this article, Adam Levy, has no position in any stocks mentioned. The Motley Fool has positions in and recommends JPMorgan Chase and Vanguard S&P 500 ETF.