Times are tough, stocks are going down like the Titanic, and people are panicking. You can smell the fear in the air like a malignant cologne. Many huge companies’ stock is valued at a fraction of what it would normally sell for and the Price/Earnings Ratio (P/E) is enough to make a hardened stock broker blink.

So what does all this doom and gloom mean?!??

It’s Time To Buy!!!

Through the magic of dollar cost averaging, there probably won’t be a better time to buy stocks for a very long time, as long as you follow a buy-and-hold mindset. Your 401k is designed to be a long-term investment vehicle, yet a huge number of people are failing the ‘gut check’ and getting out of the market.

Critical Market Factors

This investor flight is actually causing the market to go down even faster, as large investment firms are ‘forced’ to liquidate their investors holdings, usually in mutual funds, at any price. More people bail out, more stock hits the market, the prices across the board go down. Lather, rinse, repeat.

That’s one of the big reasons it’s time to start bucking the trend and buy more stocks, mutual funds, and other investments for your retirement funds. There’s no way to predict exactly when the market will bottom out, but you can still stock up on high-quality investments that can see you through the winter of your retirement, at a great discount.

Dollar Cost Averaging

Dollar cost averaging is the practice of investing on a periodic basis, using the same amount of money at each investment point. That means at some points during the year, you might buy investments at a higher price, while other times of the year you might buy the same stocks at a lower price.

This spreads the risk of a purchase at a ‘high’ point in the investments sales price over a larger timer period, or ‘averaging’ the costs. You don’t make as much buying at the lows, but you also don’t spend as much buying at the highs, when you average out the price.

For those that have already seen impressive drops in the value of their investments, but still have a long investment time frame ahead (say 10 years or more) increasing your purchases now can ‘average you out’ of the losses you’ve seen, as the stock prices recover. Even if they never recover back completely, the addition of low-priced shares into your portfolio will average out your profits and earnings more than either selling off, or hunkering down and not investing during this period.

For the new investor, now is a time of opportunity! Assuming new investors are younger, your time frame until investment can be particularly long (up to 45 years in some cases). Buying stock now and holding it could prove to be the smartest investment you could make for retirement, as the normal increase in stock over the long term have historically averaged 8-10% annually. Buying even a few investments now, and holding for decades, can add up to some serious retirement benefits.

Buy, Buy, Buy!

Now is also a good time to increase your 401k contributions, at least through the end of the year. If you’ve been making periodic contributions, but haven’t reached the $15,500 contribution limit ($20,500 for age 50 and above) you still have enough time to increase contributions a bit before the cutoff.

Choose wisely, consider stocks with strong historical records but weak short-term sales. Select investments in companies here for the long haul, and you could make quite a haul at retirement time yourself.