Don't let the Great Recession haunt your investing dreams

This month marks the 10-year anniversary of the current bull market's beginnings. Yet many Americans remain reluctant to invest in the stock market, a scary hangover from the Great Recession.

From October 2007 to March 2009, the S&P 500 plummeted nearly 57 percent and it took more than five years for the index to recover. But the share of Americans with money invested in the stock market still hasn't returned to pre-recession levels, according to various studies.

In 2018, a Gallup Poll survey found 55 percent of respondents were invested in stocks or stock funds, either personally or jointly with a spouse, down from 65 percent in 2007. Among those younger than 35, the drop-off is especially pronounced: An average of 38 percent of the youngest Americans owned stocks from 2008 to 2018, down from 52 percent in the 2006-2007 period.

This is a problem not only because noninvestors have missed out on the longest-ever bull market in U.S. stocks, during which the S&P 500 more than quadrupled. Investing is also one of the best ways to build wealth, and most Americans will need money beyond Social Security benefits for a comfortable retirement.

Here's how to shake any lingering apprehension about investing:

There will be another market crash in the future, possibly worse than the last, so accept this as a given. The S&P 500 has endured eight bear markets (defined as slumps in excess of 20 percent from a recent high) in the past 60 years, about one every 7.5 years, which may serve as a gauge for how often these occur.

But bear markets aren't entirely bad. They tend to be much shorter than bull markets, periods of rising stock prices, with losses that pale in comparison with the gains. Recession-era bear markets — arguably the worst of times — have seen average S&P 500 declines of 37 percent since 1946, while bull markets during a comparable period delivered average gains of more than 160 percent, according to data from LPL Financial.

Long-term investors have time to wait for the market to recover, so bear markets can actually be a good time to buy stocks at lower prices.

Warren Buffett, long heralded as an investor to emulate, also happens to be among the world's richest people. This might wrongly suggest you need a lot of money to start investing, but Buffett began investing when he was 11 and bought his first stock for $38 a share.

Today, an even smaller amount of money can get you started, thanks to robo-advisers. After you answer questions about goals, risk tolerance and other investing preferences, these automated services recommend a customized portfolio typically made up of low-cost index funds. Some robo-advisers have zero account minimums, which makes investing accessible for beginners.

For a do-it-yourself approach, it's also possible to build a well-diversified portfolio on a budget. Less than $300 currently could buy one share of any of the most popular exchange-traded funds tracking the S&P 500. Meanwhile, there are popular ETFs that provide exposure to other markets — bonds or non-U.S. stocks, for example — trading for about $100 a share or less. And some brokers allow investors to buy fractional shares of individual stocks or ETFs.

While investing-related decisions — broker vs. robo-adviser, which company best fits your needs or what investments to buy — certainly aren't trivial, it's important to start investing in the market. Investing is a trade-off between spending today or saving for tomorrow, and focusing on what kind of future you want to fund can be a powerful motivator.

Success in investing requires more than a one-time or sporadic effort. Experts recommend regularly adding to your portfolio over time. This strategy, known as dollar-cost averaging, ensures you spread out the price paid for investments, reducing the risk of buying all of your shares at a high.

Also consider the trade-off between collecting dividends today vs. reinvesting that money. Reinvesting dividends is commonplace in 401(k)s, but optional for DIY investors. Doing so can help your portfolio grow more quickly.

The S&P 500's average 30-year historical return is 11.5 percent when dividends are reinvested and 9.1 percent when they're not, according YCharts, a financial data and investment research platform.

Finally, stay invested. The stock market will inevitably stumble at times, but it's a proven long-term bet. Ignore short-term fluctuations (even bear markets) so you don't second-guess your long-term investment strategy or worse yet, sell near the bottom.

Anna-Louise Jackson is a writer at NerdWallet. E-mail: ajackson@nerdwallet.com. Twitter: @aljax7.