Here's how I'll start investing this August with £850

Does it take a lot of money to start investing?

In short, the answer is no. In fact, I see some advantages of starting in the stock market on a small scale. It can avoid the long delays that can be caused by waiting to save too much money. It can also mean that beginners' mistakes are less expensive when one starts investing with larger amounts.

If I had £850 to spare and wanted to start buying shares for the first time in the next few weeks, here's how I would do it.

The basic method

My first step would be to set up a shares trading account or a Stocks and Shares ISA and put money into it.

For £850, I can comfortably part with every few shares. That's exactly what I would do, as putting all my eggs in one basket is an unnecessary accumulation of risk.

Would I like to get rich quickly after starting to invest? No, for two reasons.

First, I need to be realistic about expectations: turning £850 into £1,000 or £2,000 or £3,000 over time is possible. But £850 is unlikely to give me a portfolio worth tens of thousands of pounds over the next few years if I stick to well-proven, blue-chip companies. Such a temporary restoration is possible, but unlikely.

Second, although it may sound strange, my first focus would not be on making money but trying to avoid losing it.

As many people find when they start investing, investing real money in the stock market is not the same as thinking about investing. I can learn hard lessons, as many investors do. So I would focus first on understanding and managing risk, rather than on the potentially unrealistic hopes of huge short-term returns.

Finding stocks to buy

Yes, my point in investing would be to try and increase the value of my portfolio. I hope I can achieve that, although I would take a long-term approach to it.

So, what would I look for?

A company like Reckitt (LSE: RKT) illustrates the point. Its share price has fallen recently due to negative court results in the baby food industry that put its huge costs and potentially competitors at risk. That can eat into profits for years.

But the base market for the types of products that Reckitt manufactures, such as cleaning products, is large and likely to remain so. Because of its strong brand recognition and proprietary technology, it is able to charge a price premium. That has been a proven recipe for profit over the past decades and, while there may be ups and downs along the way depending on how wealthy households are or otherwise, I expect that to remain the case.

Just finding a good business is not enough to succeed in the stock market, however: valuation is also important. This is where Reckitt's problems present what I see as an opportunity as I think the share price does not reflect the long term potential value of the business. If I had money to invest today and no knowledge of the stock market, Reckitt would be on my shopping list as I start investing.