I’d start investing by buying shares with these 3 characteristics

With thousands of companies listed on the UK and US stock markets alone, it can be hard to know where to start investing. How to find the right sorts of shares with no background in the market? I would start investing the same way I would go on. Specifically, there are three characteristics I would look for when trying to find shares to buy. As Warren Buffett explains, buying a share is like buying a small stake in a business. So when investing, I look at the overall business and ask whether I think it has what it takes to do well in future. Taking the long-term approach to investing, the future for me is not just coming years, but decades. So I consider the possible size of a company’s target market, what competitive advantages it has, and how well its business model allows it to convert such advantages to profits. Imagine you could buy, for £1,000, a business that earned £500 per year. After two years, you would already have paid for it (excluding any interest costs) and own it outright. On paper, that business is selling for a price-to-earnings (P/E) ratio of two. That is low and sounds...

Read more