1. Invest with money you do not need for the next five years. This includes setting aside some savings for emergencies (1 month minimum), unemployment (3-6 months worth). This are basically money you cannot afford to lose. Put them in a high interest deposits or money market funds so that they do not get eroded by inflation, a very real phenomenon.
2. Where you end depends on where you begin. Right now, with markets slowly reflating, it is still possible to pick up good businesses at a low price. Markets can only go up alot, up a little, down a little, or down alot. We've probably gone past the down alot part, so it will be wise to get into the market even if it remains flat, because there are dividends from stock, as well as cash flowing into stocks will lift up general stock price.
That is why I advise holding for at least 3-6 months. You won't make a lot of money, but it means losing less on brokerage. As long as you average 10% annually for your investing life, you would have doubled your money very soon, beating inflation in the process. While averages smooth out volatility, as mentioned in my posts, you can learn how to avoid down a lot years.
Remember, we cannot predict where the stock market will go, but we can have a best guess whether the company will continue making money (making more will be better) by looking at the industry it is in, and its financial health (more in the future). This way, when the real economy picks up, the stock will be a beneficiary of positive earnings and revenue growth, something which underlies long term stock investing.