You might read in the newspapers that the stock market is in a great turmoil right now and that investors are losing their shirts. Listening to the experts, it seems you should run away screaming and hide your money in your mattress. However, I think that would be a mistake, as now is a great time to invest your money in the stock market.

For the average person, investing in stocks should be a long-term investment – at least five years. It should be investments for your retirement, sending the kids to college in 10-15 years or similar things. If you buy stocks with money you need within 5 years I don’t call it investing. I call it gambling.

If you have this long-term view and you regularly set aside money to invest for these purposes, you will actually welcome these lower prices. Yes, lower prices! Look at it this way. If you go to the supermarket to buy milk, you would be happy to buy your milk for less than you could yesterday. When you drive to the gas station to fill up your car with gas, you don’t like paying more per gallon of gas than you did yesterday. Why do you think it is the opposite when you buy stocks? If you can go out and buy shares in good companies at half the price of what you could buy them for a few months ago, why aren’t you overjoyed? Sure, the return for the next couple of years might not be very good. But you can’t predict when it turns around and, when it does so, history indicates that stock prices will go back and beyond their previous prices.

Of course, the companies you invest in are not having as good results as they did when the economy was doing better. Their revenues and earnings are down. But chances are it is only going to last a couple of years and then they are back to normal and you have twice as many shares as you would have had if you bought for the same dollar amount a few months earlier. All history of the stock market indicates this. We even made it out of the depression of the 1930′s. If you had bought stocks then and held on to them you would be rich today – and very old.

There are however two major challenges you should be aware of. One is, if you need the money now and are trying to sell at decent prices. That is difficult. You will receive a dollar amount that is less than you could have if you had sold 6 months ago. But if you are in this situation, it should be because you bought the stocks more than 5 years ago. In that case you probably have earned money, even with the market as much down as it is right now. The other challenge is that you need to invest in companies that are alive and well when the market turns. So you have to buy shares in quality companies. If you don’t know how to identify these stocks, I recommend you buy stocks in an indexed mutual fund. That way you just follow the whole market and don’t have to worry about selecting the stocks.

However, before you run out and scoop up these stocks at special sale prices, remember to only invest money that you don’t need now and to build your cash reserve first.

Brian Ullitz has written the e-book “Enjoy Healthy Personal Finances”. He is educated at Copenhagen Business School in Denmark and has worked with finances since 1999. He is now the driving force behind the personal finance site http://finance4everyone.org/

He enjoys talking about finances and loves to help people improve their financial knowledge. It is his firm belief that everyone can experience prosperity. This includes you too. All it takes is the knowledge of how you can do it better and action to implement this knowledge in your life.

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