There are lots of excuses people use to avoid getting into the stock market even when they are interested in doing so to try and build wealth.
One example? Lack of money!
In reality, though, one of the things I see as attractive about the stock market as compared to many other investment types is that it does not need a lot of money to get going.
If I had only £350 I could start investing right away. If I had never invested before, that is what I would do!
Why now
What would be the hurry? After all, if I wait months or perhaps years, the market could crash and I may be able to buy high-quality shares for much less than they cost now.
True, there will be another stock market crash sooner or later. But nobody knows when.
One of the risks of what is known as ‘market timing’ is that in trying to buy cheap, one can end up sitting out of the market for years and missing some brilliant opportunities during that period.
In any case, I would not be looking to buy the whole market, just a few shares, with my £350. No matter how reasonably or otherwise the market valuation overall may look, I can still hunt for individual bargains.
I’d start on a small scale
But if I only spend £350 buying a few shares – which at least would give me some diversification rather than putting it all into my favourite idea – then would it really be worth the time in terms of the financial results I might get?
Realistically, I doubt that doing that would make me rich. It may (or not) make me a tidy return over the long run, but I would be happy with that.
But crucially, it would give me stock market experience, without having large sums at stake while I was still a stock market novice.
How I’d begin in the stock market
Still, I would not rely just on hard knocks (or successes) to teach me – I would do some research of my own to understand more about how the market works and learn some important investing principles.
At the same time I would set up a share-dealing account or Stocks and Shares ISA and put the £350 into it so it was ready to put to use as soon as I found what I thought looked like promising shares to buy.
Great companies at attractive prices
As an example, one share I would happily start investing by buying is Unilever (LSE: ULVR).
The multinational consumer goods giant operates in a market that sees huge daily demand and that looks likely to stay. People will want to wash their hair and clean their clothes for the foreseeable future.
Thanks to a carefully built stable of premium brands such as Domestos and Dove, Unilever can distinguish itself from competitors. That lets it charge more, giving it pricing power.
It is currently offloading its ice cream business. That could be good for profit margins, but risks diverting management attention from the core business for a while.
Still, I would happily buy Unilever shares if I found the price attractive. For now, I find the valuation a bit rich — so am hunting elsewhere in the market for shares to buy.
This post was originally published on Motley Fool
