Here’s how a stock market beginner could get going in 2025 with £260!

Christopher Ruane explains how a stock market novice could start buying shares for the first time this year with just a few hundred pounds.

| More on:
Runner standing at the starting point with 2025 year for starting in new year 2025 to achieve business planing and success concept.

Image source: Getty Images

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.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Could 2025 be the year to start investing in the stock market, even if only on a limited budget? I expect many people will be asking themselves that this month – and, as happens every year, some of them will end up doing nothing between now and the end of December!

But it need not take a lot of money to become a stock market investor. Here is how someone could start buying shares with a spare £260 this week.

Starting now versus procrastinating

There is always a reason (or excuse) to put off starting, even if it can be done with a fairly small amount of money. Maybe waiting for more knowledge, a better looking market, or even fear of the market crashing.

I think knowledge is helpful, so it definitely makes sense for someone to get to grips with how the stock market works before they begin to invest.

But I think there are good reasons to start sooner rather than later. After all, I take a long-term approach to investing and think many investors would benefit from having a longer not shorter timeframe available to them.

Don’t try timing the market

But what about the other potential concern I mentioned, that there may be a stock market crash around the corner? That may always be true, in the sense that the market will crash again sooner or later, although none of us knows when.

But I think it would be more worrying if an investor sought to ‘buy the market‘. As my own approach focuses on buying a diversified selection of individual shares to buy, it bothers me less.

Even in a broadly overvalued market there can be some bargains – and actually I think the UK market currently offers quite a few such bargain opportunities.

With £260, diversification may seem tricky – but it is still possible to invest in, say, a couple of different shares.

Getting ready to invest

Before actually buying any shares, an investor needs a way to do so. With just £260, minimum fees and commissions could quickly eat into the money when buying and holding shares.

So I think it makes sense to take time to compare different share-dealing accounts and Stocks and Shares ISAs. Different investors each have their own financial situation and objectives.

Looking for shares to buy

When looking for shares to buy, I think most new investors could do worse than to try and keep it simple. By that, I mean sticking to large companies with proven business models they understand.

But finding the right company is not enough for successful investing. It is also important to find it at the right share price. One share I think investors should consider is Aviva (LSE: AV).

The FTSE 100 insurer has a strong business thanks to high, resilient demand for insurance services. It has strong brands and a very large customer base that can help it capitalise on that.

The company has been raising its annual dividend per share since a cut in 2020 (no dividend is ever guaranteed to last). It yields 7.3%. So half the £260 put into Aviva shares would hopefully earn around £9 a year of passive income.

One risk I see is the proposed merger with Direct Line leading competitors to target customers by cutting prices. That could hurt profits for Aviva.

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 no position in any of the shares mentioned. 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.

More on Investing Articles

Investing Articles

Would Warren Buffett buy BP shares, as oil excitement grows?

Warren Buffett is a big investor in the oil business, and BP's performance has been attracting investor attention in results…

Read more »

Cropped shot of an affectionate young couple posing with a bunch of flowers in their kitchen on their anniversary
Investing Articles

Here’s how long-term loyalty to UK shares can lead to dazzling returns!

The most successful UK and US share investors buy shares to hold for the long term, as this report shows.

Read more »

Investing Articles

NatWest has just smashed brokers’ dividend forecasts!

After NatWest delivered a Valentine’s Day surprise to investors, our writer thinks the experts may have to raise their dividend…

Read more »

Investing Articles

The NatWest share price slips in early trading despite positive FY 2024 results. What’s the deal?

The NatWest share price is down slightly this morning after the bank released its final results for 2024. Our writer…

Read more »

Young Asian man drinking coffee at home and looking at his phone
Investing Articles

My Legal & General shares have climbed just 7% — so how come I’m sitting on a 20% gain?

Harvey Jones' trading account is showing only a modest return on his Legal & General Shares, but on drilling down…

Read more »

Investing Articles

Prediction: the BP share price could rise in 2025 (or it might fall!)

Following this week’s release of the energy giant’s 2024 results, our writer reviews the prospects for the BP (LSE:BP.) share…

Read more »

many happy international football fans watching tv
Investing Articles

What’s gone wrong with the FTSE 100’s ‘King of Trainers’?

Feeling the pain of a 28% drop in the JD Sports share price over the past three months, our writer…

Read more »

Investing Articles

Is it too late for investors to consider buying these outstanding FTSE 100 shares?

Stephen Wright wonders whether now's the time to consider buying shares in the FTSE 100’s outstanding companies, despite some high…

Read more »