There are various reasons why some people dream of making money in the stock market but let years pass without taking any action. One common reason I think some people don’t start buying stocks sooner is because they don’t have enough cash.

This is understandable – or is it?

After all, it is possible to start buying stocks with a relatively tiny amount of money. In fact, in some ways I think it makes more sense than spending years saving up a huge sum of money to start investing. For example, it means that beginner mistakes will hopefully be less financially painful than if you were investing a much larger sum.

If I had never invested before and had a spare £380, here are the three steps I would take to start buying shares now.

Step One: Setting Up a Stock Trading Account

The first step I would take would be to set up an account that would allow me to buy shares and deposit £380 into them, ready to invest.

This could be, for example, a share trading account or an ISA.

There are many options available, so I would take my time to find what works best for me. With a relatively tiny amount on hand, one of my considerations would be the commission or fees I would have to pay to buy or sell the stock.

Step Two: Getting to Know the Stock Market

My next step will be to understand how the stock market works.

From the outside, it may seem plain. But when someone is actually investing, and not just observing, some things can be more complicated than they seem at first glance. For example, a flashy business with a high share price may turn out to be a bad investment.

So I’d like to find out how different people value stocks and why.

My goal would be to prepare myself to find great stocks that could potentially facilitate me boost the value of my investment in the long term, due to the gap between the company’s current valuation and what I believe it is worth.

Step Three: Building a Portfolio

Now I’d be ready to buy stocks!

Diversification is an essential risk management strategy and even with £380 I would start by spreading the money across more than one share.

An example of the stocks I am looking for can be illustrated with an example of a stock I recently bought, Diageo (LSE:DGE). The brewer and distiller has a wide range of premium brands that it sells globally, giving it pricing power that helped it earn £3.7bn in post-tax profits last year.

These profits contribute to a dividend payout that has grown annually for more than three decades.

The current yield is 3.1%, so I hope this stock will provide me with passive income in the form of dividends. However, the bigger attraction for me is the potential for the stock to grow that I see.

The stock is down 22% over the past five years. I think that reflects some real risks. Luxury spending is down in many markets. Diageo’s high-priced spirits have seen weaker demand in Latin America, which could spill over elsewhere, hurting profits.

However, as a long-term investor, this is the type of stock I would happily hold for years.