If you’re new to investing in stocks, you might think that you need a bundle of cash to open a share dealing account. These days, this simply isn’t the case. Many DIY trading platforms allow you to buy and sell stocks for as little as £1. Here’s what you need to know.

How much does it cost to start investing in stocks?

When first investing in stocks, you may feel more comfortable depositing a low amount to start with. Many share dealing accounts take this into account and allow you to trade with only a small opening deposit.

Several investing accounts allow you to trade with low minimum deposits, including:

• Fineco – no minimum, but each trade costs £2.95
• Hargreaves Lansdown – £1 minimum,  £11.95 fee for each trade
• Interactive investor – no minimum, £7.99 fee for each trade (under the ‘Investor’ pricing plan)
• DEGIRO – no minimum, but there’s a £2.03 share dealing charge
• Freetrade – £2 minimum, with no fee for each trade

While the above options provide a cheap way for you to begin investing in stocks, other popular providers such as IG and Etoro require a higher initial deposit.

IG has a minimum deposit requirement of £250, while Etoro requires you to stump up $200 (£147) unless you deposit by bank transfer, in which case you’ll have to deposit a minimum of $500 (£367). If you deposit in pounds, then Etoro will convert this into dollars for you, for a fee.

If you are looking to invest in stocks and shares, be aware of any platform charges that apply, in addition to trading fees. It’s also worth looking at reviews in order to compare the pros and cons of each trading account.

To help you, see our list of the top-rated share dealing accounts.

Don’t I need to invest a lot to earn decent returns?

It almost goes without saying, but if you are looking to invest in stocks, then the more you invest, the more you stand to gain – or lose.

If you don’t want to invest a lump sum, you can regularly ‘drip feed’ money into your account instead. This is also known as ‘pound-cost averaging’. It’s a popular strategy among those who worry about investing a large sum, only for its value to dip in a short space of time.

For example, say you deposit £6,000 into an investment account via a lump sum. If your portfolio plummets 10% by the end of the month, you may find this £600 loss difficult to stomach.

But if you drip feed in £50 per month instead – which is £6,000 over a year – then you’ll be less impacted should the value of your investment take a 10% hit within the first month. In fact, as you are investing £50 at regular intervals, you’ll be picking up stocks more cheaply in the months following any dips.

While drip feeding in cash isn’t a guaranteed way to boost returns, the strategy can help reduce your exposure to volatility.

Can I lose money when investing in stocks?

Remember, as with any investing, the value of your investments can go down as well as up, and past performance is not an indication of future results. It’s best to only ever invest what you can afford to lose.

If investing in stocks is new to you, it’s worth understanding your personal appetite for risk. It’s also worth taking the time to determine how often you will buy stocks. Will you trade a few times a week? Or is it likely you’ll take a longer-term approach and buy and hold stocks?

It’s also a good idea to spend time studying the basics of investing to determine whether investing in stocks is for you.

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