Start buying shares now, or hang on a while until you have more money to do so?
That is a common dilemma for would-be investors.
It makes sense that people do not want to start buying shares unless they feel comfortable they have enough spare cash after their daily needs are taken care of.
But how much money does it really take to start investing?
Waiting, or moving now
Taking more time to save up money could mean someone starts with more funds.
But it also pushes out the timeline for investing – perhaps by years, or even decades. Some people keep putting off doing something until they have more money. But as we all know, life can throw up unexpected costs.
I also see a risk in waiting until one has more to spend to start buying shares. It is not just that this could mean missing a brilliant time in the markets, although that is potentially true.
It is also about the cost of any beginner’s mistakes. Starting on a smaller scale can make such lessons cheaper, even if they are still painful.
Being realistic about an investing budget
It is possible to invest with just a few hundred pounds. £300 is certainly enough, in my view.
But investing on a relatively modest scale does bring some additional points to consider.
One is diversification. Not putting all your eggs in one basket is a simple but important risk management strategy at any level of investing. It can be more challenging (though still possible) when investing a few hundred pounds than with a much bigger sum.
Another consideration is dealing fees, commissions, administration charges and the like. If these have a minimum amount, they can soon eat into £300.
So it pays to choose carefully how you plan to start buying and owning shares.
There are lots of options when it comes to share-dealing accounts, Stocks and Shares ISAs and trading apps.
Starting with intention
Over time we learn more, but I think there is still a lot to be said for starting as you mean to go on.
When it comes to someone who wants to start buying shares, this can involve taking a long-term approach to investing.
One share I think investors ought to consider at the moment given its long-term prospects is retailer JD Sports (LSE: JD).
One lesson many investors learn to their profit is that there can be a difference between a share and a business.
The JD Sports share price has done terribly, losing half its value over the past five years. Compare that to a 52% gain during that period for the FTSE 100 index of leading British shares, of which JD is a member.
But while the share price is in pennies, is JD Sports a bad business? I do not think so.
It is profitable, has a proven commercial model and has gained global scale.
In fact, I think the current share price could be a long-term bargain. That is why I have recently added to my holding in it.
Yes, there are risks. Weaker consumer sentiment could hurt demand for pricey trainers. JD’s international expansion has made it a more complicated business to manage.
But I reckon it has ongoing potential not fully reflected in the current share price.
