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There are many reasons (or excuses) people use to put off buying stocks, from lack of spare cash to needing more time to do research. But time, as they say, kills all deals. If I had never invested before and wanted to start buying stocks on a limited budget, here is the approach I would take. In fact, that’s the approach I take as an investor right now!
Why starting small can beat waiting for size
Before I get into the details of how I invest, let me explain two reasons why I think it would make sense to start buying stocks with a limited budget.
The first is that, although people start investing with the hope of making money, the path is not always smooth. Beginner mistakes can be painful but valuable lessons in investing. Making such mistakes with little risk can make them less painful – but just as important.
The second reason is that life often requires money. Waiting until someone has saved many thousands of pounds before investing can mean waiting too long in some cases – and potentially missing out on great opportunities in the stock market at that time.
A practical way to invest
So, how would I start buying stocks with practice?
My first move would be to investigate the wide range of trading accounts and Shares and Shares ISAs available, to choose one that suits my individual needs.
I would start making regular contributions. £25 a week adds up to £1,300 a year. My approach is to invest what suits me, although I aim for some consistency as I think that is practice.
With the ability to buy stocks, I would be able to grasp ideas such as how to value them.
Then I look at companies that I understand and that I feel have strong long-term business prospects to decide if I want to buy them. Even with a lot of research, what seems like a promising company can be disappointing. So I would start buying stocks the way I meant to (and by doing so): by diversifying.
Here is an example
To illustrate, one share I think investors with an eye on income should consider buying: IM&G (LSE: MNG).
I like companies that operate in markets that have a large number of potential buyers and a large revenue potential. That is certainly true of the property management space in which M&G operates – and I expect that to be true for a long time to come.
IM&G can compete due to certain specific strengths. It has a well-known and respected brand, which helps to attract and retain customers. It has an established customer base, with over 5m customers and 800 institutional customers. It also has deep experience in financial markets.
However, one risk I see (and all stocks have risks) is that customers are taking more money out than they put into M&G’s funds, as has been happening recently in a large part of the company’s business (outside of its own business). Gems separation).
On balance, however, I like the company’s potential relative to its share price. paid a dividend of 9.8% compared to yesterday.
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