Buying stock during a recession or an economic slowdown can really pay off as an investor takes advantage of generally lower stock prices. Depending upon investment goals, someone who plans to hold their stock for a period of several years has a good chance of reaping financial reward. However, buying during a recession may not be a wise choice for an investor who is investing for the short term.

Large, more stable companies that will most likely make it through hard times may experience a double-digit decrease in share price, for example. If an investor buys this stock with the intention of waiting out the recession, he could likely reap a gain on the investment after the economy picks up. On the other hand, someone who invests in the same stock in the short term will probably not see as large of a gain. For short-term investors, the most difficult task is to decide when a stock has hit its lowest price before buying.

An investor should consider one’s stage of life and the length of time dedicated for investing. The market can be more volatile in the short term and may not be a good idea for anyone who needs to cash in securities in the near future. Risk significantly decreases the longer the time period invested. For example, a younger investor has more time to recover from a fall in share price than an older investor who is only a few years from retirement.

During a recession, investors may see their investments go down and may be tempted to cut their losses and sell their securities. If they have the time and ability to ride it out, though, many investments can return to their pre-recession worth. There are no easy answers when it comes to whether or not to buy stocks during a recession. Individuals should consider many factors, such as age, temperament, expenses and assets, before making this important decision. While situational financial information is constantly evolving, U.S. economist and commentator Ben Stein has written an article on Yahoo! Finance entitled “Recession-Proof Your Investment Strategy” that contains some additional sustainable information on investing during a recession.