Image source: Getty Images
Does it take a lot of time or money to start investing?
The answer to both questions, I reckon, is ‘no’.
I think a stock market novice could realistically aim to begin buying shares within a matter of days. Here is how.
Putting money in an account for investing
A simple first move would be to set up an account that allows money to be put to use in the stock market.
That might be a share-dealing account, Stocks and Shares ISA, or share-dealing app.
Choosing, then setting up, such an account and transferring funds to it may take some time. That’s why I put this first in the list of steps someone should consider if they want to start investing.
Deciding what and how
It also makes sense for a new investor (and some experienced ones, too!) to get clear about what they aim to achieve and how.
That may sound obvious: people invest to build wealth.
In practice, though, investors have different timeframes and risk tolerances. There is no one-size-fits-all approach to deciding how to invest and what success looks like.
Learning how wealth is built – or lost – in the stock market
It is unrealistic to expect to understand how the stock market works in detail in the space of just a few days.
However, that time is enough for someone to get to grips with some of the key elements that matter.
For example, a good business and a good investment are not the same thing. So understanding how valuation works is important. So too is figuring out how to manage risks.
Building a portfolio
One simple risk-management technique is not putting all your eggs in one basket, known as diversification.
I think it makes sense to start investing as one aims to go on – building a diversified portfolio of shares in high-quality companies at attractive prices.
In doing so, billionaire Warren Buffett prefers to stick to what he knows and understands. I think that makes sense for investors on any budget.
One share to consider
One share I think investors should consider at its current price is bakery chain Greggs (LSE: GRG).
The Greggs share price has put in a less than tasty performance, crashing 49% over the past year.
That reflects City concerns about the company’s growth prospects.
With thousands of shops already, there are some signs that the glory years of Greggs’ growth could be over. Higher wage and tax costs also threaten to eat into profits, this year and perhaps beyond.
But I see this as a business that is fairly simple to understand. It has a large customer base, economies of scale, some unique products, and a well-known, somewhat quirky brand that I do not think any other baker can match.
There is work to be done to get performance back to where investors would like it to be. If that happens, though, hopefully the share price will follow.
