Image source: The Motley Fool
Legendary investor Warren Buffett didn't wait long to start investing. Already when he was a schoolboy he bought shares.
Most of us take longer than that. In fact, many people plan to start buying stocks, but keep putting it off year after year.
Sometimes a looming loss of opportunity can provide the motivation to get going, such as the looming annual deadline for stocks and shares ISA contributions. But some people don't start investing yet and wait until they have more funds at their disposal.
In fact, I think starting to invest on a small scale can be beneficial.
It means being able to take advantage of current opportunities instead of missing them, and any beginner's mistake can be less costly if made on a small scale.
If you had less than a thousand pounds to spare today, this is how you would use Buffett's approach to start investing.
Stick to what you know
Warren Buffett doesn't put all his eggs in one basket. Even the best company can run into unexpected difficulties, which is why he keeps his portfolio diversified.
This is a simple risk management method that you would use even if you only had a few hundred pounds to start investing.
What kind of stocks does Buffett buy?
Consider one you've had for decades: Coca Cola (NYSE: KO).
When Buffett started buying shares, the company had already been listed on the US stock market for decades. His brand was iconic and known in much of the world.
In other words, Buffett didn't try to buy a small company that few had heard of in hopes of beating the crowd.
Your typical approach, as here, is to stick with what you know. He likes large companies with proven business models that he understands and the potential for significant cash generation in the future.
Sit and do little
Having bought the stake in Coca-Cola, Buffett has held it for almost 30 years. He now earns more than half of what he paid each year in dividends. On top of that, the value of his stake has skyrocketed.
No investment is risk-free. Coca-Cola faces challenges ranging from sugar taxes to ingredient inflation. They could hurt profits, and ultimately a company that pays dividends depends on making money. They are not guaranteed.
But what's striking about Buffett's investment in Coca-Cola, like so many other stocks he owns, is its simplicity.
He identified what was already a brilliant business and bought it when the stock was attractively priced relative to its potential. Then he kept them for decades. That's exactly the kind of long-term investing approach he would take if he were about to start investing for the first time.
