3 reasons to start buying shares this week

A lot of people wait years or decades before putting their investing dream into action – if they ever do it at all. But if I had never invested before and was waiting to start buying shares, I think now could be a great time to do so. That is exactly what I am doing at the moment, although I am not a first-time investor.

Here are three reasons why.

1. Attractive stock market valuations

The key to successful investment is buying the right share at the right price, although another way to think about that is ‘at the right time’. The past several years have been bruising for the economy.

One consequence of that is a lot of shares in high-quality companies have been trading relatively cheaply. A common way of valuing shares is to use a price-to-earnings (P/E) ratio, basically dividing a company’s market capitalisation by its profits. Right now a lot of companies I think are attractive sell at low P/E ratios.

Normally, the lower a P/E ratio is, the cheaper the company’s valuation. Next is on 11, Legal & General is at 6 and Barclays is at 5. That could reflect risks that investors think might hurt future earnings. Indeed, although Barclays has a low P/E ratio, I have no plans to buy any bank shares for my portfolio in the near future as the banking industry continues to face considerable uncertainty in my view.

But the overall picture of the UK stock market is one in which a lot of good companies are selling for attractive prices. That could suddenly change, so I am snapping up bargains right now while I can.

2. Looming Stocks and Shares ISA deadline

Next week is the deadline for current contributions to a Stocks and Shares ISA in the current tax year.

This runs on a ‘use it or lose it’ principle. After the deadline, I will be able to contribute to next year’s ISA. But any unused portion of my GBP20,000 allowance for the present year will expire forever.

That is not necessarily a reason for me to rush out and start buying shares, to be clear. The deadline is for contributions, so I could put money into my ISA before the deadline even if I do not have any immediate plans to buy shares. But with so many bargains on offer at the moment, I am ready to buy.

3.

Taking the long-term view

I believe in long-term investing. But how long is the long term? Basically, the sooner someone starts investing, the longer their overall timeframe as an investor will be.

That can help them benefit from the positive impact time can have on investment results. There is a caveat, which is that even good shares can be too expensive, just as sometimes they might be selling for much less than they are worth. So I would not start buying shares immediately unless I felt I could find shares in great companies selling at attractive prices.

Fortunately, in today’s market, I think there are lots of those about!

Tags:

blue-nile-1 listed on couponmatrix.ukcrowne-plaza listed on couponmatrix.ukenvirofone-com listed on couponmatrix.ukfat-face listed on couponmatrix.uklighting-direct listed on couponmatrix.ukpuma listed on couponmatrix.uk
blue-nile-1 listed on couponmatrix.ukBlue Nile was founded in 1999 with the idea that the diamond and engagement ring business was more than ready for some innovation. Revolutionizing the industry with their radical online business model, Blue Nile made it possible for customers like you to shop for extraordinary, high-quality diamonds at a great value price. So, if you're looking for a little sparkle in your life, why not use your Blue Nile promo code to make it happen.
crowne-plaza listed on couponmatrix.ukAfter a long day’s work, there’s nothing quite like a stay at a Crowne Plaza to put your body and mind at ease. Providing comprehensive comfort for business workers and travellers alike, you can sample and save on a stay of your own with the help of the latest Crowne Plaza deals here at Groupon. Nothing beats a delicious meal followed by a good night’s rest, so give your body the relief it deserve with a stay at Crowne Plaza today.
envirofone-com listed on couponmatrix.ukEnvirofone is all about giving customers cash for their old mobiles phones. For 10 years Envirofone has refurbished gadgets from customers across Europe and now, through the online Envirofone shop, aims to give customers even more value. Snap up a Envirofone voucher code and pick up a premium restored device at a fraction of the retail price. With a rigorous 100-point quality control check, Envirofone ensures the best quality products with all the accessories you need to stay connected. Enjoy a 12-month warranty, free next-day delivery and get calling and texting in no time!
fat-face listed on couponmatrix.ukWhether you’re heading to the countryside or the coast, there’s plenty of style and functionality to be found at FatFace. With a huge range of men’s, women’s and kid’s clothing, you can dress the whole family for your next big adventure. Shop with a Fat Face discount code and hit the slopes or take a hike in both comfort and style. With complete outfits for every activity, FatFace is every explorer's favourite shopping destination.
lighting-direct listed on couponmatrix.ukWelcome to Lighting Direct, for the best in consumer lighting and home lighting solutions. With lights for anything you could possibly think of and solutions for inside and outside the home, Lighting Direct is the number 1 outlet for your lighting needs. Whether you want to light up a party, or you're looking to give your home some ambience, use your Lighting Direct discount code to light up for less. No matter what you're after, Lighting Direct is sure to have you covered! Love light with Lighting Direct.
puma listed on couponmatrix.ukFor stylish, performance enhancing footwear and sports gear, choose Puma. Do your current pair of trainers resemble something your dog may mistake for their favourite furry ferret toy? Have you forgotten what it’s like to get up in the morning and feel excited for a trainer-clad commute to work? Get that adrenalin kick and round up those pennies for a Puma discount code from us. Strong and comfortable shoes designed with athletes in mind keep feet supported and exercise safer.