By Elizabeth Ody
Kiplinger's Personal Finance
Sunday, November 9, 2008

I seem to be fielding the same questions from the 20somethings I know. "Isn't it true that you're supposed to buy stocks when they're down?" they ask me. "So should I start investing in stocks now?"

Yes, you should buy stocks when they're down. And yes, that absolutely means you should be buying stocks now.

Investing when stocks are down means you can buy a greater number of shares for the same amount of money. Stocks tend to recover sharply and quickly after an extended period of being trashed. In 2003, not long after the last bear market ended, the Standard & Poor's 500-stock index returned 29 percent.

Historically, the stocks of large U.S. companies have gained 10 percent per year, on average. And the stock market has never lost money over a 20-year period.

Stocks may continue to fall or to bump along the bottom for months. But you can jump in today at least knowing that, wherever the market goes the next couple of years, you were able to get in a lot closer to the bottom than most people.

First, decide how much to invest. You shouldn't start investing until all your other financial ducks are in a row. Pay down any high-interest loans, such as credit-card debt, before you start putting cash into stocks.

Think about when you'll want to access this money. Don't sink into stocks cash you'll need in the next five years for, say, grad-school tuition or a down payment on a car, because the market could take time to turn around. But don't despair if that leaves you little to work with. You can buy top-notch investments with as little as $250.

Next, pick an approach. A mutual fund is the best vehicle for newbies because someone else handles the grunt work of picking stocks and because you can buy a fully diversified portfolio with a modest amount of money.

A foolproof way of earning at least average returns is to buy a low-cost index fund that tracks an established market benchmark.

Finally, set up an account and go. You can set up an account with an online broker and then invest in the funds available through the broker's fund "supermarket."