If you have ever thought you might want to start buying shares but never made the move, you are far from alone.
One reason many people do not put their dream into action is a perception that it can take a lot of money to invest in the stock market.
In reality, though, as summer approaches and many people are eyeing the idea of weekend getaways that could cost a couple of hundred pounds or more, that same amount could be put to use as a way for someone to start buying shares.
Here’s what it takes
The money needs to be put somewhere where it can be practically put to that use. A share-dealing account or Stocks and Shares ISA should work for that.
A few hundred pounds is enough to diversify across multiple shares, a simple but important risk management strategy.
Before venturing into the stock market, someone should understand at least some key elements of how it works. A good business is not necessarily the same as a good investment, so learning how to think and act like a good investor is important
A small start, but a start
It is also important to be realistic about expectations.
When many people decide to start investing, they understandably focus on the excitement of what could happen.
In practice, though, what could happen and what actually ends up happening are not necessarily the same thing. It is important to avoid being unrealistic partly because that can lead people to take poorly considered risks.
If someone starts buying shares, learns along the way, and gains confidence to invest more over time, I think they could do better than if they get into something they do not properly understand and act rashly.
Here’s a share to think about
As an example of a share I think someone who wants to start investing should consider, I can point to ITV (LSE: ITV).
Now, I said above that investors always need to be mindful of risks and that is true here.
ITV’s operating landscape has changed dramatically from the days when families all gathered around the goggle box in their living room. A far broader spectrum of entertainment options is now available, fragmenting the audience.
That poses a risk to ITV’s revenues and profits. But it also gives the FTSE 250 company some opportunities
The company has expanded its own digital offering substantially in recent years. It also has a studio rental and production business that means it can actually benefit from other content producers making shows.
The ITV share price is in pennies, 35% below where it stood five years ago.
But I think that undervalues the long-term prospects for the company. In addition to that, ITV offers a dividend yield of 6.1%. That could potentially mean ongoing passive income stream for shareholders, if the dividend is maintained.
