Trap or opportunity?

Q: I’ve heard it’s good to invest regularly in stocks. But some stocks I’m thinking of buying are down by 35 percent to 65 percent now. Do I buy into those, or stay away from them? Is it a trap? — S.P., Riverside, Calif.

A: Assuming you’ve researched the companies and believe that they have very promising futures, what you’re looking at is not a trap — it’s a glorious buying opportunity!

The stock market has fallen sharply in recent months (as it does every few years or so), taking many solid businesses’ stocks down with it. Market volatility is to be expected if you’re going to invest in stocks, and it can present great entry prices to stocks you’d like to own.

The key is being a long-term investor. Not every stock will bounce back from a fall, but if you buy intending to hold for at least five years, if not 10 or 20, and you’ve bought a healthy and growing company, then it’s likely to recover from its drop (perhaps in a few months and possibly in a few years) and go on to hit new highs.

Q: Which mutual funds offer the most income to shareholders? — C.D., Hattiesburg, Miss.

A: Focus on funds with the word “income” in their names. They’re likely to invest primarily in stocks that pay dividends and/or bonds that pay interest. Note that other kinds of funds can offer income, too, if they hold certain stocks or bonds. We recommend stock index funds for many investors, and they generate income, too.

To see high-quality, low-fee mutual funds we recommend, check out the model portfolios in our “Rule Your Retirement” service at Fool.com/services.