Buying stocks and holding them for the long term is one of the most effective ways to build wealth. Over the long term, stocks typically produce returns of between 7% to 10% per annum – much higher than the returns on offer from savings accounts.

Is now a good time to start buying stocks, considering the volatility in the markets? Let’s discuss.

Rare investment opportunities

Although it may not seem like a good idea to invest when there is so much uncertainty, history shows that periods like these are actually often a great time to buy stocks. When uncertainty is high – and investors are on edge – there are often attractive market opportunities that are not available when the market is rising and investors are relaxed and optimistic about the future.

By buying at low levels during periods of market stress, investors can do well when market conditions return to normal. History shows that those who are willing to buy during dips and be patient are usually rewarded in the long run.

It is worth noting that the market has recovered from geopolitical turmoil like the one we are currently experiencing several times in the past. In recent years, for example, the market has rebounded from the war in Ukraine and the conflict between Israel and Hamas.

Of course, the current conflict poses some risks to the economy in the near term – higher oil prices could harm the economy. However, with a five-year outlook, the economy and market are likely to recover.

A lot of stocks are down

As for investment opportunities, I personally see a lot of them now. A lot of the stocks I follow are 20%, 30% or more below their 52-week highs, despite the fact that the underlying companies are performing extremely well and have tremendous long-term growth potential.

Check this name

One stock I think is worth watching today is… Microsoft (NASDAQ: MSFT), one of the largest technology companies in the world. It is currently trading near $370. Last November, the price was close to $550.

From an investment perspective, there are a lot of things to like about Microsoft. First of all, its software is used by companies all over the world, so it has reliable and recurring revenue.

Secondly, it is one of the biggest players in cloud computing. Looking ahead, this industry is expected to grow approximately 20% annually over the next five years, so there is a lot of growth potential.

As for the valuation, it seems very reasonable. At present, the company’s price-to-earnings ratio is around 20.

I will point out that a lot of UK investors clearly see opportunity in this valuation. Over the past week, the stock has been one of the most bought names AG Bell.

Of course, there are risks. One issue that has some investors concerned is that the company is spending a lot of money on AI without guaranteeing that it will pay off.

Microsoft has gone through technology transitions in the past before. So I think it’s worth giving it the benefit of the doubt and taking a closer look.

It should be noted that investors can reduce their risks by purchasing shares in a range of different companies. Dripping money into the market slowly is another smart risk management strategy to consider.