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How to start buying stocks for the first time? The appeal may be obvious, but the process can seem daunting.
In fact, I think it can be a simple thing to do.
Starting on a relatively modest scale rather than waiting to save thousands of pounds first could mean not only that you start buying shares sooner, but also that any beginner mistakes are less costly.
1. Set up a trading account
My first step would be to put the money in an account that would allow me to buy and sell stocks. This could be a shares trading account or stocks and Shares ISA, for example.
With less than £500 to invest but still diversifying across different stocks to help me manage my risks, commissions and fees could soon add up. So I would pay close attention to what fit my budget and my investment goals.
2. Definition of an investment objective
Some investors want to buy growth stocks. Others look for sources of passive income thanks to dividends. Some would like both.
I think having clear goals can help you make decisions along the way.
3. Learn about the stock market
I have no shares in the robot manufacturer. Intuitive Surgical (NASDAQ:ISRG).
Because? After all, I think it's a big deal. The surgery market is large and will likely remain so indefinitely. By automating parts of the process, Intuitive's robotics offering can offer hospitals consistency and cost savings.
Selling and repairing the machines and selling single-use accessories used in each consultation is a lucrative business. Rivals may observe the company's success and launch similar products, which will reduce profitability. In fact, I see it as a key risk.
But Intuitive has big advantages, from proprietary technology to an extensive library of procedural legacy processes.
So why don't I own the shares? Simply put, I think they are too expensive. Becoming familiar with concepts such as valuation is important from the moment one begins investing, if not before.
4. Building a portfolio
Next, I would make a shopping list of what I thought were great deals. When those shares were available at a price I considered attractive, I would start buying them with my £500.
Those 500 pounds would be enough for me to diversify, for example by buying two or three different stocks. You could also consider buying shares in investment trusts, which themselves are often diversified across a variety of different investments.
I would start buying stocks the way I intended to continue: focusing on high-quality companies and intending to hold them for the long term.
5. Maintain and aim for long-term growth
Over time, my experience would grow. Hopefully, so would my portfolio valuation and passive income streams, although that's not guaranteed.
My goal would be to not trade regularly. But my goal would be to invest more money over time, whether it's fresh money or just the dividends I earned.
