Does it make sense to start investing with £ 3 per day?

Money is needed to earn money, as the old saying says. That is true when it comes to the stock market. Beginning to invest requires some money.

Not everyone who wants to invest has much plenty.

Something that I see as an advantage of the stock market compared to other types of investments is that it has a lower entry cost. It is possible to start buying shares with only a couple of hundreds of pounds (or even less).

To illustrate, this is how someone could start investing with £ 3 per day.

A regular savings habit can generate investment capital

£ 3 a day may sound like a lot of money.

But think about what adds to time. Within a year, £ 1,095. For a decade, it would be more than £ 10k. Large oaks grow from small acorns, so I think it can be worth even with a tight budget.

Given that, it is easy to understand why I think that a regular savings habit can be a powerful discipline for someone to get into, even if you can only forgive a few pounds a day.

To have such a habit, I think it would help choose a shared treatment account or ISA actions and actions in which to deposit the £ 3 newspaper.

Where and how to start investing

In limited funds, does it make sense to go for the most exciting apparent part? What happens to one who has already done brilliantly, like Nvidia either Tesla?

A common mistake when people begin to invest is not to understand how investors really earn money.

Choosing a company that has excellent commercial perspectives is only part of it (and past performance is not a reliable indicator of what will happen in the future).

Another key part is valuation. What pays for an action is important because earning money generally implies buying an action for less than what is worthwhile in the long term, between the profit of the shares and dividends.

Even the best part can be a grower, so an intelligent investor always diversifies. It is sufficient £ 1,095 per year to spread the risk in multiple actions.

In summary, before someone hastened to start investing, they must learn about how the stock market works.

Choose shares to buy

Then they can start finding actions to buy.

I like to continue with areas that I feel that I understand well and the companies that I think I can judge.

For example, an action that I bought recently is Greggs (LSE: GRG). Its 2024 results published last week did not excite the enthusiasm in the city, and the part overturned.

But the business seems solid to me. The demand for convenient foods such as cakes and sandwiches is high and also resistant. There are many rivals, but Greggs has some competitive advantages in my opinion. One is its large store of stores. Another are offers of unique products.

The company is still solidly profitable. So why has the price of the shares fallen to a level that is only 12 times profits?

The highest personnel costs due to the budgetary changes of last year are a reason. Another risk is the continuous decrease in many secondary streets, which means fewer customers.

But I think this is a solid business, and that assessment also seems very reasonable.