Why I'd start buying shares with £250 today not £20000 in future! – Motley Fool UK

Is it worth waiting to start buying shares until one has more money to invest? Our writer doesn’t think so and here he explains why.
Image source: Getty Images
Many people have some vague notion to start buying shares – someday. But they wait and wait, saying they need more money or to understand the stock market better.
I certainly think it is a sensible idea to get to know how the stock market works before investing in it. But putting something off for too long often ends up with one not doing it at all. So, if I wanted to start investing, here is why I would do it now with a few hundred pounds rather than waiting and saving a larger amount to begin investing months or years later.
Imagine doubling your money. If you did that with £20,000, you would have £40,000. But if you did it with £250 you would only have £500. That is still a strong return but not exactly the stuff of millionaire dreams!
If it was easy to double one’s money, it might make sense to start buying shares with large sums of money. But the reality is that investing is difficult even for experts. If I was investing for the first time, I may well make some beginner’s mistakes.
In the long term that could help me become a much better investor. But given the chance of learning a cheap lesson or an expensive one, I would rather it cost me as little money as possible. Starting investing on a small scale may mean any gains I make are also fairly small. But — in my view more importantly — it limits how much I may lose as I learn how to become a more successful investor in reality not just theory.
Another benefit I see to starting small is that I might actually learn some of those investing lessons more clearly.
Take diversification as an example. The idea seems easy enough to get your head around: by spreading money across a range of investments, you feel less impact if any one of them performs badly.
With £20,000, that seems straightforward enough. I could put £2,000 into the shares of 10 different companies, for example. But with £250, things do not look so easy. Some shares cost more than £25, to start with. For example, one share in AstraZeneca would already have used up more than 40% of the £250. But aside from price, the key challenge may be commission and fees. Most share purchases have a commission and often there is a minimum charge. If I tried to invest £250 in 10 different shares, such fees would threaten to eat up a large portion of my funds.
So I would need to consider alternatives. For example, what if I diversified across just two or three shares? What if I invested in an investment vehicle that itself offered me exposure to dozens of diversified holdings? That is the thinking behind investment trusts like City of London Investment Trust. But they typically carry a management fee. Is that right for me?
The practicality of investing a limited amount like £250 would force me to confront such questions of how to follow key investment principles from day one. That may seem annoying – but actually I think it could help me learn how to be a more successful investor, fast!

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be considered so you should consider taking independent financial advice.
C Ruane has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.
| Christopher Ruane
Christopher Ruane considers a trio of lessons from the career of investor Warren Buffett that he thinks can help increase…
Read more »
| Roland Head
REITs provide an affordable way to invest in commercial property, says Roland Head. He reveals his three top UK real…
Read more »
| Dr. James Fox
This FTSE 100 stalwart has demonstrated plenty of volatility in recent weeks. But I think the dividend big-hitter is a…
Read more »
| Royston Wild
Buying dividend stocks can be a great way to make a lifetime of robust passive income. Here are several shares…
Read more »
| Dr. James Fox
For me, passive income is the Holy Grail of investing. I want to maximise my income and it’s even better…
Read more »
| Dr. James Fox
Rolls-Royce shares have continued downwards in recent months despite several positive indicators for the business. Here’s why I’m buying.
Read more »
| Harshil Patel
As a Stocks and Shares ISA investor, our writer looks at stock market gains achieved by FTSE 100, FTSE 250…
Read more »
| Charlie Keough
With a strong dividend yield and low valuation, this Fool explains why he’d buy Lloyds shares their current price.
Read more »
View All
Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be considered so you should consider taking independent financial advice.
To make the world Smarter, Happier, And Richer
Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show and premium investing services.
Read more about us >

We have taken reasonable steps to ensure that any information provided by The Motley Fool Ltd, is accurate at the time of publishing. Any opinions expressed are the opinions of the authors only. The content provided has not taken into account the particular circumstances of any specific individual or group of individuals and does not constitute personal advice or a personal recommendation. No content should be relied upon as constituting personal advice or a personal recommendation, when making your decisions. If you require any personal advice or recommendations, please speak to an independent qualified financial adviser. No liability is accepted by the author, The Motley Fool Ltd or Richdale Brokers and Financial Services Ltd for any loss or detriment experienced by any individual from any decision, whether consequent to, or in any way related to the content provided by The Motley Fool Ltd; the provision of which is an unregulated activity.
The value of stocks, shares and any dividend income may fall as well as rise and is not guaranteed, so you may get back less than you invested. You should not invest any money you cannot afford to lose, and you should not rely on any dividend income to meet your living expenses. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, administrative costs, withholding taxes and different accounting and reporting standards. They may have other tax implications, and may not provide the same, or any, regulatory protection. Exchange rate charges may adversely affect the value of shares in sterling terms, and you could lose money in sterling even if the stock price rises in the currency of origin. Any performance statistics that do not adjust for exchange rate changes are likely to result in an inaccurate portrayal of real returns for sterling-based investors.
Fool and The Motley Fool are trading names of The Motley Fool Ltd. The Motley Fool Ltd is an appointed representative of Richdale Brokers & Financial Services Ltd who are authorised and regulated by the Financial Conduct Authority (FRN: 422737). In this capacity we are permitted to act as a credit-broker, not a lender, for consumer credit products. We may also publish information, opinion and commentary about consumer credit products, loans, mortgages, insurance, savings and investment products and services, including those of our affiliate partners. We do not provide personal advice and we will not arrange any products on your behalf. Should you require personal advice, you should speak to an independent, qualified financial adviser.
The Motley Fool Ltd. Registered Office: 5 New Street Square, London EC4A 3TW. | Registered in England & Wales. Company No: 3736872. VAT Number: 188035783.
© 1998 – 2022 The Motley Fool. All rights reserved. The Motley Fool, Fool, and the Fool logo are registered trademarks of The Motley Fool Holdings Inc.


Leave a Comment