One novice buys his first share -- but Dad isn't happy.
"I'm sorry, Dad. What's done is done, and there's no turning back now. I only hope you can one day understand why I've done this."
Above is an excerpt of a real-life conversation I had with my father about two months ago. All right... well perhaps I have added some wording for effect, but the truth is that when I delivered such a statement, it certainly felt like a drama.
If there is one thing Dad has always been a firm believer in (and it's something that has certainly been passed down to me), it's the importance of looking after your money.
Happy birthday, son!
Despite working in an industry that could be considered as far away from finance as you could possibly get, Dad's always been an oracle in terms of knowing the best methods and financial products to help secure a healthy financial future.
In fact, I've even heard rumours that my 13th birthday present was going to be my first cash ISA instead of a Super Nintendo. Despite him nearly destroying my hard-earned teenage street-cred in one fell swoop, I still look to Dad for a range of financial advice. From the importance of pensions to the best type of mortgages, it's great to have someone to bounce off ideas (and who costs nothing).
So: back to my opening gambit. What could I have done to warrant having to deliver such a statement? Well, against all the financial/parental advice, I had just bought my first share.
Money down the drain
That's right. Dad -- 'super-saver' himself -- has the same belief as many people in this country.
Investing in shares is akin to throwing money away.
And it's certainly easy to see why he could come to this conclusion, what with stock-market crashes and the odd sensationalised share-price collapse being favourite topics with our media. But if there is one thing I've learnt from my time at the Fool, it's that buying shares really isn't that scary.
Similar to many other people I'm sure, I've become pretty disheartened with the low interest rates available on savings accounts. According to Which?, the average rate of interest on a one-year fixed-rate savings account has only just hit 2.85%, which is still below the current rate of inflation.
Starting at square one
So if you, like me, are a complete beginner at investing, where do you start?
Well, I knew I wanted something low risk, preferably with a good dividend that I could reinvest in order to help steadily grow my portfolio over time. I'm certainly not looking for a quick return on my money, I just want to try and help my long-term financial future potentially become a little rosier.
So my first port of call was to track down some long-standing, successful companies. In particular, I noticed Vodafone (LSE: VOD) surpassed Royal Dutch Shell (LSE: RDSB) to become the FTSE 100's biggest dividend payer and declare more than £6.7 billion to shareholders.
However, to cut to the chase, I soon compiled a short-list of five companies that I would have been happy to be a shareholder in.
Now to square two
The next step was to start looking a little deeper at their financial reports, which was something I've never done before. Again, my initial preconceptions were that I'd be trawling through pages and pages of data, but when I actually started looking, I realised that this was not actually the case.
Some of the reports are very reader-friendly, and dare I say it -- fun! This fantastic example from Brainjuicer (LSE: BJU) is a great case in point. What's more, I found the Fool's very own Valuing Shares primer a great help in finding out the best numbers to start crunching, and the simple formulae I'd need.
Pressing the buy button
With my selection finally chosen (it was Halfords (LSE: HFD) by the way, for those who are interested), my trembling fingers clicked the big red 'confirm' button on my broker's web page. Over the next few days, I was frantically checking the current price at every opportunity and, as I fully expected, I had little pangs of panic every time my shares dropped.
(Here's a quick hint from me for any new investor -- checking the price at weekly intervals is a good way to avoid unnecessary sweating. After all, when buying for the long term, a slight drop at 12.04pm on a Monday afternoon is unlikely to have an effect on your retirement!)
So my message to those of you out there that are looking at taking the plunge is a simple one. Why not give it a try? It goes without saying that, as with any financial outlay, figure out first what you can afford to invest -- and don't invest what you can't afford to lose!
And as always, The Motley Fool is always willing to lend a hand. I found this new free report -- "What Every New Investor Needs to Know" -- ideal for those just starting out, as it answers many of the most frequent questions asked by novice investors.
Happy investing, and good luck!
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Chris owns shares in Halfords. The Motley Fool owns shares in BrainJuicer and has recommended shares in Halfords.