3 reasons to start buying shares this week

Many people wait years or years before realizing their investment dreams – if they do at all. But if I haven’t invested before and have been waiting to start buying stocks, I think now might be a good time to do so. This is exactly what I am doing now, although I am not the first investor.

Here are three reasons why.

1. Attractive stock market valuation

The key to successful investing is buying the right stock at the right price, although another way of thinking about it is ‘at the right time’.

The past few years have been bruising for the economy. One consequence is that many stocks in high-quality companies have been trading cheaply.

A common way to value stocks is to use the price-to-earnings (P/E) ratio, basically dividing a company’s market capitalization by its earnings. Now many companies that I consider attractive are selling at low P/E ratios. Usually, the lower the P/E ratio, the lower the value of the company. Next it’s 11 Legal & General it is at 6 and Barclays is at 5.

This can represent a risk that investors think could harm future earnings. Indeed, even though Barclays has a low P/E ratio, I have no plans to buy bank shares for my portfolio in the near future as the banking industry continues to face uncertainty.

But the overall picture of the UK stock market is one in which many good companies are selling for attractive prices. That can change suddenly, so I’ll grab the offer now while I can.

2. Looming Shares and Shares ISA deadline

Next week is the deadline for current contributions to your Stocks and Shares ISA in the current tax year. It goes by the ‘use it or lose it’ principle. After the deadline, I will be able to contribute to the next year’s ISA. But any unused portion of the £20,000 allowance for the current year will expire.

That shouldn’t be a reason for me to rush out and start buying stocks, to be clear. Deadlines for contributions, so I can put money into my ISA before the deadline even if I have no immediate plans to buy shares.

But with so many deals on offer now, I’m ready to buy.

3. Take a long-term view

I believe in long-term investment. But how long does it last?

In fact, the sooner people start investing, the longer their tenure as an investor will be. That can help them benefit from the time of positive impact on investment results.

There is a caveat, which is that good stocks can be very expensive, as they can sometimes be sold for less than they are worth.

So I wouldn’t buy a stock outright unless I thought I could find a stock in a big company that was selling at an attractive price. Fortunately, in today’s market, I have a lot of people!