Stock market

I would thus start buying shares from £600.

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Thinking about getting into the stock market and actually getting into it are two different things. Many people aspire to start buying shares, but not all of them will successfully take steps to make this dream a reality.

One reason may be lack of funds.

The point, however, is that it doesn’t necessarily take a lot of money to start buying shares. In fact, I think it might be better to start with less than more. That way, any beginner’s mistakes will hopefully be less costly.

If I had an extra £600 and wanted to start investing in shares, how would I go about it?

Setting up a share account

My first move would be to find a way to buy (and sell) shares. So I would set up a share dealing account or stocks and shares ISA. There are many choices on the market – my goal is to find the one that makes the most sense for my needs.

I would put £600 into my account then spend some time learning about shares.

For example, many people start buying shares by investing in what they see as a great business. But a great business can turn out to be a poor investment if one pays too much for its shares. So in my opinion, it is important to understand basic but important concepts like valuation before buying a share.

Setting up an investment strategy

Armed with this knowledge, I will then decide what my investment strategy is.

For example, if I want to create a passive income stream, I can buy dividend shares. If my reason for starting to buy shares was the potential for capital growth and I wasn’t worried about profits, that might mean I’m leaning more towards growth stocks.

Either way, in the beginning I would err on the side of caution.

Yes, the stock market can be rewarding – but it also has risks. So I’d stick to big blue-chip companies with proven business models, large customer markets, and healthy-looking balance sheets.

Finding Shares to Buy

Even then, things may not work out as planned. This could be due to an error in my judgment, but it could just be a company facing unforeseen circumstances beyond its control. So I will spread my money across different companies. With £600 to start buying shares, I could invest in three or four different businesses.

Here is an example of what I would look for. JD Witherspoon (LSE: JDW).

The demand for social meeting places is likely to remain. Many pubs are closing, so a drop in demand threatens Spoons’ profits. On the other hand, a strong market can support the strongest players – and I feel Spoons is just that. Its low-cost formula has won it legions of regular patrons.

The company is profitable and I think its earnings can grow in the coming years. Its sales are now significantly higher than a few years ago when it actually had more pubs, which continues to focus on its productivity.

Weaker consumer spending may lead to lower pints being drawn. But spoons have a strong position in a market where I expect to see long-term demand.

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