How I’d start investing in 2023 with £5 a day

The beginning of the year can bring some things into focus. An example is personal finance. I think a lot of people think in January they should start investing. But in December, few can do it.

If I want to start buying stocks for the first time in a way that I can realistically do, this is how I do it.

Set a savings target

My first step will be deciding how much I can afford to save on a regular basis. One way to do this is to set regular goals.

For example, if I put away £5 a day, I will return £1,825 to invest in a year. Different people have their own conditions, so for some, a smaller amount may be better, while for others it may be higher than mine.

An alternative approach is to set aside money left over at the end of each week or month. The reason I won’t do it is that I know the spending requirements are sometimes higher than normal. If I didn’t save constantly, I might not get into the habit.

Whatever approach I take, I will put the money into a share-dealing account, or a Stocks and Shares ISA.

Get ready

While money is necessary to start investing, I also need to know what I want. So I will learn about the stock market.

For example, I can start reading about topics like value. When I look at companies such as Tesla with a market capitalization of almost $400bn, how can I know whether it is overvalued or still undervalued despite the large numbers?

With thousands of companies listed on the UK and US stock markets, I won’t try to do everything. Instead, I will focus on companies in areas that I know. That will help me assess my prospects. I noticed something important when evaluating investment opportunities.

Instead of focusing on the upside potential, I will start investing by trying to keep the risk down, if possible. So I will look for stocks in established blue-chip companies, which already have a proven business model.

For example, I have shares in apart and Standard Chartered. Both companies have proven business models. Like all companies, they face risks. That’s why I will start investing as I intend to continue – with a diversified portfolio.

I will start investing in 2023

It took me a while to build my fund and find stocks that I thought suited my investment goals. So I think patience is important for investors.

But I will still be keen to start investing if I find shares that I think match what I was looking for. It can be tempting to save for year after year hoping for a once-in-a-lifetime opportunity to come along. But instead of doing that, I will start putting money to work in the stock market as soon as I feel I have found some great shares to buy.

Already, on the first trading day of 2023, there are some stocks that I would buy for my portfolio at the current price.