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A fiver a day might not buy you much. But it can lay the foundation for a stock portfolio that can be built over the long term to build wealth from the start. That’s right – even with just £5 a day it’s possible to start investing in top shares of proven and profitable companies.
Why €5 per day is enough
£5 a day equates to more than £1,800 a year. Some shares are sold for pennies. Many blue chip shares trade for just a few pounds each, if that.
Some trading accounts cater to investors with a lot of money to splash around. But not all of them do, and there are plenty of options available for those who want to start (and stay) investing on a more modest scale.
So an investor can look at it differently stock trading accounts And Stocks and shares ISAs and then make a choice about what best suits their own financial circumstances and objectives.
Learn while you go
Even after decades of investing, billionaires love it Warren Buffett admit that they still make mistakes in the market.
So it is to be expected that when someone starts investing, they may make some mistakes along the way.
That said, I think it makes sense to try to avoid some basic mistakes. So before investing, I think a smart approach is to learn more about how the stock market works, including concepts such as valuation. Buying a good stock at a bad price can be just as disappointing as buying a bad stock.
Drawing up an investment strategy
Investing shouldn’t be like throwing mud at a wall to see what sticks.
Successful investors like Buffett tend to stick to areas they understand, have a specific goal when they put their money in the market, and only buy stocks when they think there is an attractive investment case at the current price.
In my own portfolio, I mix stocks that I think have a strong opportunity for business growth with dividend stocks that I hope can help me build passive income streams.
One stock to consider
One stock, in my opinion, has both growth earnings and growth prospects that investors should take into account as part of a diversified portfolio Diageo (LSE: DGE).
The company is the driving force behind it Guinness and spirits like the Johnny Walker range of whiskies. Owning unique premium brands can be a very profitable business. Diageo’s multi-billion pound annual profits have enabled the company to increase its dividend annually for more than thirty years.
One risk I see is that sales will suffer from poor forecasting. The current shortages of Guinness in some British pubs worries me because it should be a piece of cake for Diageo to get the right amount of black stuff into pubs. If it’s struggling to get even that right, I wonder what else management is doing wrong.
However, as a long-term investor, I like the business model and share price valuation right now. Diageo continues to offer promising dividend prospects in my opinion.