Image source: Britvic (copyright Evan Doherty)
If I have heard one person say how quickly this year has gone so far, I have heard dozens! New Year’s resolutions such as ‘go to the gym’, ‘start investing’ and ‘set up passive income streams’ now seem like a distant memory in many cases.
Fortunately, it is never too late to start investing!
Even decades after leaving school, the start of a new school year can seem to many of us like a new year in itself. So it seems like an obvious time to think about turning over a new leaf – and that can include getting into the stock market for the first time.
No time like the present
A common mistake that means people do not start investing even when they hope to is waiting for the perfect moment.
They can spend years or even decades waiting for a stock market crash that they hope will let them start scooping up shares cheaply.
I understand that instinct, but it risks overlooking some important points.
For starters, nobody knows when the next crash will come. Maybe it will be tomorrow — but perhaps it is still years down the line.
Secondly, even if the market did crash, how could a non-investor decide the point at which it looked cheap?
If anything, I reckon a sudden crash could actually make someone with no market experience less likely, not more likely, to start investing.
Rather than focusing on market timing, I think it makes more sense to focus on looking for attractively priced shares now.
Investing doesn’t require lots of money
Another reason some people do not start investing when they first mean to is a perception that it takes a lot of money.
Actually though, that is simply not the case.
Say someone put aside £100 a month in a share-dealing account or Stocks and Shares ISA.
That is well over £1,000 a year — ample money to get going in the stock market and diversify across multiple shares.
On the lookout for shares to buy
Of course, it is possible to start drip-feeding money each month into a dealing account even before you have decided what exactly to do with it.
Before investing, it helps to get to grips with some important stock market basics, such as how to value shares.
It also helps to get clear on exactly why you want to start investing.
For some people, it is all about growth. Others aim to buy dividend shares that can generate passive income, while some investors target both growth and income.
Here’s a share to consider
One share I think is worth looking at for both growth and income is FTSE 250 homewares retailer Dunelm (LSE: DNLM).
The share yields 5.3%, meaning it currently pays around £5.30 in ordinary dividends annually per £100 invested. On top of that, it has a strong track record of using spare cash to pay special dividends.
Dividends are never guaranteed though, and depend on business performance.
The Dunelm share price is 28% cheaper than a year ago, reflecting the risk that weakening consumer confidence could hurt sales, while inflation adds costs.
Yet as a long-term investor, I think the company’s proven business model, large store estate and sizeable range of unique products give it ongoing growth opportunities.
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Christopher Ruane owns shares in Dunelm.
This story originally appeared on Motley Fool
