Here’s how a stock market beginner could get going in 2025 with a spare £300!

Our writer considers some approaches and principles he thinks might help someone with a few hundred pounds spare to start investing in the stock market.

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The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Bus waiting in front of the London Stock Exchange on a sunny day.

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When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

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Getting into the stock market does not need to involve large sums of money.

Here is how someone who has not invested before could start buying shares this year, with just £300.

Starting big and small can be costly in different ways

One advantage of beginning on a fairly modest scale is that any beginner’s mistakes will hopefully be less expensive than if one was investing thousands of pounds!

Should you invest £1,000 in Diageo right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Diageo made the list?

See the 6 stocks

But there are potential disadvantages too. For example, some stockbrokers charge minimum commissions or fees, that could quickly eat into £300.

So I think it makes sense to do some research and compare different options when selecting a share-dealing account or Stocks and Shares ISA.

Learning how to invest

Before getting into the stock market, it is important to understand how it works.

For example, over the past five years, chipmaker Nvidia has seen its share price soar by 2,264%. That is exceptional performance. Can it last?

Created with Highcharts 11.4.3Nvidia PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

Past performance is not necessarily a guide to what may happen in future.

Just because a share has done well does not mean it will keep doing so. But the converse is also true: just because a share has done well does not necessarily mean that it will perform weakly in coming years. Rolls-Royce shares did brilliantly in 2023. They did brilliantly again last year.

So, even novice investors need to get to grips with concepts like valuation.

Nvidia makes huge profits, but its share price is equivalent to 57 years’ worth of last year’s earnings per share (this is what is known as a price-to-earnings ratio).

To me that looks like an expensive valuation. After all, AI spending could fall and Nvidia’s competitive advantage may be eroded by increased competition in the field.

Clearly, though, not all investors see things that way, which helps explain the current valuation. Chips are a large market and the market size is set to grow over the long term. Nvidia has proprietary technology and a large existing customer base of top-flight clients. That could help it push up earnings in coming years.

As with almost any investment case, there are two sides to Nvidia at its current share price.

Personally I like the business but not the valuation, so I have no plans to invest.

Each stock market investor needs to make their own choices. But I think doing that well involves understanding how the stock market works and aiming to be a good investor from day one!

Finding shares to buy

An important principle is diversification and even with £300 it is possible for a new investor to spread risks.

For example, that could involve buying several shares or buying into an investment trust that itself has a diversified portfolio.

I think it is important too to set realistic expectations. The stock market can be rewarding – but it also involves managing risks.

Going in with a realistic approach matched to one’s budget and capabilities is important if one is serious about trying to build wealth over the long term.

But what does the head of The Motley Fool’s investing team think?

Should you invest £1,000 in Diageo right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Diageo made the list?

See the 6 stocks

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

C Ruane has no position in any of the shares mentioned. The Motley Fool UK has recommended Nvidia and Rolls-Royce Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Pound coins for sale — 51 pence?

This seems ridiculous, but we almost never see shares looking this cheap. Yet this recent ‘Best Buy Now’ has a price/book ratio of 0.51. In plain English, this means that investors effectively get in on a business that holds £1 of assets for every 51p they invest!

Of course, this is the stock market where money is always at risk — these valuations can change and there are no guarantees. But some risks are a LOT more interesting than others, and at The Motley Fool we believe this company is amongst them.

What’s more, it currently boasts a stellar dividend yield of around 8.5%, and right now it’s possible for investors to jump aboard at near-historic lows. Want to get the name for yourself?

See the full investment case

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