COMMENT
Three Tips For Starting With Shares

How should you start out with shares? Your First Investing Steps and Building Your Share Portfolio give a full rundown, but these three tips are among the most useful:

1. Start now: Harness the magic power of compounding. £1,000 invested at 10% per annum will be worth £2,594 after ten years. But after twenty years at 10%, the £1,000 will become £6,728. And after forty years, it will turn into £45,259. The upshot is simple: the sooner you start investing, the more money you are likely to make.

So for those wanting to get into shares, live below your means, start saving money and kick-off your investment career now. Here are three popular ways to track the stock market with a modest cash pot. Also, with a low-cost broker, you can start building a hand-picked portfolio with just a few hundred pounds.

2. Buy experience: Investing isn't easy and there's no substitute for first-hand encounters with manic market movements. If you're just starting out, be aware that novice investors tend to buy during market highs and sell during market lows. Only after years of experience does the knack of 'buy low, sell high' really come good.

So before making any investment, read some books on those who've been there, done it all and know everything about the difficulties of making money with shares. These tomes on Warren Buffett, Peter Lynch's One Up On Wall Street and Investing with Anthony Bolton by Jonathan Davis may be good starting points.

3. Utilise tax-free shelters: Few people have the earning power to put the maximum £7,000 into a share ISA every year. And few people trouble the capital gains tax (CGT) allowance with a £8,200-plus annual profit as well.

But hopefully over time, your income will grow, your investment contributions will grow and the value of your portfolio will grow. And at some point in the years to come, you could very well trigger a CGT liability -- unless you've planned ahead and invested via an ISA. So avoid paying CGT in the future (and all the associated tax planning headaches!) and utilise tax-free ISA wrappers from Day One.

Learn More: Cheap Online Brokers | Share ISAs | Index Trackers