BARGAIN TIME; Plunge into stock market NOW.

Byline: JOHN HUSBAND

RECOVERY or false dawn? Shares have bounced back by an astonishing 18 per cent in little more than a month.

The FTSE 100 index of leading shares, which peaked at just below 7,000 on New Year's Eve, 1999, slipped to 3,287 last month as Britain and America went to war. Now it is back up to around 3,900.

Is this the end of the three-year slump? Or yet another trap for the unwary? As our graphic above shows, there have been at least three false dawns already when sharp recoveries in shares were followed by an even steeper drop.

Mirror Money rightly called the top of the market in January, 2000. Today we'll stick our neck out again.

There may be the odd hiccup but in five years, you'll be kicking yourself for not buying now. Telecom firm finance manager Neil Hooson has already taken the plunge by investing in shares and salting away a regular sum to buy more.

Neil, of Leeds, says he's confident that he has all the angles covered.

He says: "The market when I invested was already a lot lower than it has been in the three previous years. I think it has probably reached bottom by now. Having said that, I would not be surprised if it were to drop further.

"But the risk of another significant fall from this level can't be high."

Nowadays, the dividend return on shares is averaging 3.65 per cent - more than most bank and building society accounts are paying.

And unlike shares, deposit accounts offer little prospect of increasing your income and no chance of any capital gain. Had you put pounds 1,000 in a deposit account ten years ago, you would have received pounds 58 yearly interest.

Ten years on, you would now be getting only pounds 18 yearly interest and still have your pounds 1,000.

But in a typical unit trust, your yearly income would have grown from pounds 46 to pounds 66 and your pounds 1,000 would now be worth pounds 1,700 - even in today's depressed markets.

And in top-performing funds, such as Jupiter Income, your income would have trebled and your savings doubled.

The start of a new tax year provides the opportunity to salt away up to pounds 7,000 in a tax-free maxi ISA or pounds 3,000 in a mini ISA between now and next March.

Most investors wait until the end of the tax year to put a wad of money in. If you're brave, put what you can afford in now.

If you fear the worst may not be over, start salting away a regular monthly sub instead.

Should the market shoot ahead, you'll still do well.

But if it takes another downward lurch first, your sub will scoop up more shares on the cheap.

Neil Hooson is doing both. He put pounds 500 into Legal & General's UK Index tracker fund last autumn.

And Neil, 29, has been adding pounds 100 a month ever since despite further falls in the stock market.

He is also investing indirectly in the stock market through his telecom firm's money purchase pension scheme.

"I see them both as long-term investments," he says.