Start investing in the stock market this May with under £1,000? Here’s how!

The past few weeks have been turbulent ones in the stock market, which may make it seem like now is hardly a great time to start investing.

Looked at another way, though, it could be an excellent opportunity to get into the stock market. Some high-quality shares are now trading at prices that could be a long-term bargain.

It does not need vast sums of money, either. Here is how a stock market novice could start investing with less than £1,000.

Setting goals

To start, it could be useful to decide what the purpose of the investment is. After all, going into the market with unrealistic expectations (or no specific expectations at all) can lead to problems.

For example, some investors want to buy into companies they think have excellent growth prospects, hoping that the value of their shareholding will grow over time.

Others are more focussed on the passive income potential of owning dividend shares.

For some, a mixture of both growth and income is the goal.

Getting ready to buy shares

Another step is laying the groundwork to start buying shares.

Partly that involves understanding how the stock market works.

From diversifying a portfolio (possible even with just a few hundred pounds) to learning how to value a share, some basic but important concepts should help someone become a better investor from day one.

To start investing requires a practical way to buy shares, so it is useful to compare share-dealing accounts, Stocks and Shares ISAs, and share-dealing apps.

Starting to build a portfolio

Next, at some point, the new investor can actually start buying shares.

A lot of people begin with essentially unrealistic expectations, like hoping to double their money in a matter of months. That is possible in theory, but it is very unusual. Rather, I think the main goal when beginning ought not to be massive returns, but simply not to lose money.

That may sound unchallenging, but there is a lot to investing that may not be immediately obvious to someone who has not done it.

So I think it makes sense to start conservatively, learn from practice along the way and potentially increase the risk tolerance over time.

With that in mind, one share I think someone who wants to start should consider is consumer goods company Reckitt (LSE: RKT).

No share is without risk and that is true of this FTSE 100 owner of brands such as Finish. For example, a series of lawsuits relating to the company’s nutrition business in the US threatens to eat into future profits.

But as I see it, there is a lot to like about the share too.

For starters, it operates in a market that has large demand likely to stay that way over the long term. Thanks to its portfolio of premium brands, proprietary formulations, and global distribution network, it is able to serve that market without competing only on price.

So, it has what is known as pricing power. That has helped it make solid profits over the long term, part of which it distributes to shareholders in the form of dividends.

The post Start investing in the stock market this May with under £1,000? Here’s how! appeared first on The Motley Fool UK.

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• 3 FTSE 100 shares to consider buying in a recession
• Could this be the moment to start buying shares?
• Worried about retirement? Even at 40, £300 a month in a Stocks and Shares ISA can build wealth
• Hunting for shares to buy as the market trembles? Remember this!

C Ruane has no position in any of the shares mentioned. The Motley Fool UK has recommended Reckitt Benckiser Group Plc. 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.

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