Is £40 enough to start investing?
I’d say yes; while £40 would be the minimum for me, I’d feel comfortable beginning my investment journey with it.
Starting as early and as young as possible is always best because time in the market is often what creates the most wealth.
Starting small
I started buying fractional shares on an investment platform that offers a good range of shares and has no trading or account management fees. That said, there was a small charge to withdraw funds to a bank account.
However, since then, I discovered the power of putting my investments in a Stocks and Shares ISA.
ISAs allow an individual to deposit up to £20,000 a year into a trading account and pay no tax on the profits over the course of their life. I find that exceptional because the government usually taxes investors 20% when they sell shares. The tax man also doesn’t take dividend income from an ISA!
Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.
So, I moved my portfolio over to another broker. Mind you, the shares in my ISA now aren’t on offer as fractions, meaning I have to buy a full share or save up to afford it.
That’s something to bear in mind, considering a full Nvidia share costs $726. Of course, if I bought a fractional Nvidia share, I could do so for just $50, or £40. It would be worth me remembering that even without an ISA, the government gives me £3,000 of profit on shares sold each year, tax-free.
Next month’s investment
So, if I invested £50 this month, I’d want to look at investing £50 or more the next. Of course, I need to remember that I could lose the value of my portfolio, too. That’s because stocks can rise and fall in price.
For example, I could buy a stake in another business I like the look of at the moment called Pets at Home (LSE:PETS). A little simpler than Nvidia’s artificial intelligence operations, it is the UK’s largest pet care business.
The shares are selling over 40% lower than they were three years ago. If it is a great company and its shares are selling cheaply, it might well be a good buy!
However, management does keep quite a lot of debt on its books compared to cash at the moment. If it doesn’t deal with these financials effectively, its share price could fall as a result.
Also, with all of its operating revenue coming from the UK, there is some risk that if an economic crisis hits the country, Pets at Home would be hit harder than if it was diversified around the world.
But, overall, I’m a big fan of the business, and my personal experience shopping in the stores has left a good impression on me. So much so that I’m now a shareholder myself!
Where it could lead
In all honesty, this is how I started, with roughly just £40. Today, my portfolio has grown and continues to grow every year to help me feel secure financially in the world. It is helping me save for retirement and even consider a down payment on a mortgage.
I’m glad I started young, and if I was beginning over, I’d try to begin even sooner.
