Finance can typically appear intimidating, as if breaking into the millionaires’ membership shouldn’t be an possibility for the small-scale investor. However all of us want to start out someplace and I believe somebody can begin investing with a really modest sum of cash.

For instance, if a would-be investor had a spare £80 proper now and ambition to start out shopping for shares, right here is how they may go about making that dream come true.

Some execs and cons of investing on a small scale

£80 is sufficient to begin investing, so far as I’m involved – however it isn’t a lot.

So the investor ought to pay shut consideration to the minimal charges and expenses provided by completely different choices when selecting a share-dealing account or Shares and Shares ISA.

There may be additionally the query of diversification. Spreading one’s eggs in several baskets is a sound danger administration technique however it may be difficult when investing as little as £80.

One method may very well be to spend money on a pooled funding fund corresponding to an funding belief, that itself is invested in dozens of various firms.

It’s not all doom and gloom! From a danger administration perspective, beginning on a small scale can imply that any newbie’s errors are less expensive than when bigger sums of cash are at stake.

Plus, £80 is simply the beginning. An investor might set up a standing order or direct debit for a month-to-month or weekly contribution. £80 a month would imply that they had over £1,000 to spend money on little over a yr.

How you can make investments from scratch

However other than the practicalities of investing, how might a brand new investor with no inventory market expertise go about discovering shares to purchase?

It could sound counterintuitive, however I believe there’s a lot to be mentioned for not aiming excessive by way of returns, a lot as aiming low by way of dangers.

Or, as billionaire investor Warren Buffett places it, “The first rule of an investment is don’t lose money. And the second rule is don’t forget the first rule”.

In different phrases, focus extra on potential draw back than potential upside.

In fact we might all wish to spend money on a share after which see its price go stratospheric. However I believe there’s a lot to be mentioned for each new and skilled buyers to goal for top efficiency however prioritise managing their danger first.

One share to contemplate

That brings me to a share I believe new buyers ought to contemplate, Metropolis of London Funding Belief (LSE: CTY).

Because the title suggests, it’s an funding belief and it’s focussed totally on British firms. In truth, its largest holdings are blue-chip family names corresponding to HSBC and Shell.

Which means buyers must be practical about managing their expectations in the case of doable share price progress. Metropolis of London must carry out broadly consistent with the British financial system in my opinion.

There’s a danger that the share might do poorly if the funding managers are overly confidence a couple of explicit funding (for instance, the belief is badly down on its shareholding in Victrex). However that’s a part of the advantage of diversification.

Plus I just like the revenue prospects. Metropolis of London has grown its dividend per share yearly for 58 years.