The stock market is often a sleepy place in August. Not this year, as this week’s moves have shown. If I’ve always wanted to buy stocks on the stock market but never did, here’s how I’d start investing this August.

My plan doesn’t require a lot of money. In fact, below I discuss how I would invest an extra £500.

We learn about the stock market

My first step would be to start learning about how the stock market works. For example, consider Apple (NASDAQ: AAPL). It’s a huge success and huge profitability. But a good business doesn’t necessarily mean a good investment. It depends on the valuation.

Indeed, billionaire investor Warren Buffett recently sold a gigantic portion of his Apple stake – but he still owns a lot of shares.

We don’t know Buffett’s logic. Is it valuation (in which case why hasn’t he sold all his shares in the tech giant)? Or is it simply a case of an investor looking to diversify his portfolio? I’d like to do that from the day I start investing – £500 is more than enough to spread across a few different stocks.

From Valuation to Diversification. It makes sense to me to familiarize yourself with the basics of how the stock market works before investing money in it.

During this time I would choose the share trading account or savings and checking ISA that best suited my needs and circumstances and then deposit £500 into it.

Choosing stocks to buy

My next step would be to make a shortlist of companies that I might like as potential investments and, if the valuation was correct, start investing.

What am I looking for? In many ways, Apple is a good example. I look for a customer market that I expect to be gigantic and resilient, because it can support significant sales revenue. Then I look for a company that has a competitive advantage that could facilitate it thrive in that market.

I think Apple fits these descriptions, from its branding, to its user base, to its proprietary technology, to the services it offers.

I also consider the risk. I think when a lot of people start investing, they focus too much on the potential gains and don’t pay enough attention to the risk. As Buffett says, the first rule of investing is never lose money – and the second rule is never forget rule number one.

Apple faces risks, including growing competition from more competitively priced brands and the specter of a weakening global economy that will hurt demand for novel smartphones. Still, I’d happily own its stock — if I could buy it at the right price.

For now, though, the valuation seems high to me. So Apple wouldn’t be on my shopping list if I started investing this month.

Instead, I would look for other opportunities in the current market that I believe can offer me better value when investing in high-quality blue-chip companies.