Stock market investing and the word ‘fun’ may not immediately seem a natural alliance. Staid images of company accountants, men in suits yelling at screens, or rich bankers are more likely when visualising the stock market. But nowadays, that couldn’t be further from the truth. Owning shares in a company, means becoming a part-owner of that company. It’s also now easier than ever for beginners to investing to start and try to follow in the footsteps of a billionaire like Warren Buffett, or at least to make a million.
Become a business owner with little money
How many of us dream of having our own business? The answer is a lot. But I think stock market investing is far more enjoyable and achievable than running a business, because it allows me to own a part of many businesses. I can follow their trials and successes with a vested interest. It also makes building significant wealth a much more accessible prospect. Equally, I don’t need a lot of money to start. With apps like Trading 212, I can start investing in an ISA from just £1.
If I was starting today, I’d listen to Warren Buffett and buy cheap UK shares over the coming months. But I wouldn’t plan to buy to make a quick buck. Making a million is never going to be a speedy process, but it’s possible, even for ordinary retail investors like me. Buffett’s strategy is to buy and hold, and that’s what I do now and would do if I was a beginner. When I buy shares in my Hargreaves Lansdown Stocks and Shares ISA, I plan to hold them for at least 10 years.
Am I too old to invest?
Starting in my 40s could mean I’ve left it too late to make a million. It depends on how long I live and how much I can afford to invest. Yet I don’t let this put me off. I think the possibility of achieving that goal makes it worthwhile to try.
I use a compound interest calculator to map out my route to making a million. Striving for an effective annual interest rate of 8.8% and monthly contributions of £250, I can make a million in 40 years. By that point, I’ll be in my 80s. With longer life-expectancy, I may even have time to enjoy it. Alternatively, if I can increase my monthly contributions or achieve higher returns, I can reach the million-pound point in a quicker time frame.
If I don’t actually make a million, I should still have built up a decent nest egg to leave my children. Plus, it helps that I love learning about stock market investing, so I find the process an endlessly enjoyable one.
Warren Buffett champions index funds
Nevertheless, I understand not everyone will enjoy investing in stocks, or have the time. In that case, Warren Buffett suggests index funds are the best option. That’s because they’re a cheap and passive way of investing in a basket of stocks. I can even choose funds that suit my interests. Investing is a wide and varied landscape with something for everyone. As pension pots wither and recession bites, I think everyone should look for ways to make a million and the stock market is a great place to start.
Kirsteen has no position in any of the shares mentioned. The Motley Fool UK has recommended Hargreaves Lansdown. 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.