You don’t need tens of thousands or even thousands of pounds to start buying shares. In fact, I see some advantages to starting your investing business earlier, on a more modest basis, without having to wait years or decades to save money.

For example, it would give me a longer time frame to realize the potential benefits of my investment. I hope this might also mean that any mistakes I made as a beginner would be less costly.

If I had never invested in the stock market before and wanted to spend an extra £400 this week to start buying shares, this is how I would do it.

Starting compact and working your way up

With £400, it may be tempting to pick out a few compact companies that, if all goes well, could make it in the space.

I would take a different approach for several reasons. I am an investor, not a speculator, and with only £400 to invest, I would certainly like to avoid unnecessary risk. Instead of investing in companies that do this power become huge, I would prefer to invest in those that are Already huge and with proven business models.

In doing so, I would focus on selecting companies that I believe have good long-term prospects and attractive pricing, as well as a proven business model. However, the future is unpredictable, so I would like to reduce the risk by spreading the £400 across several different stocks.

Finding stocks to buy for the first time

With thousands of shares to buy, where would I start as a beginner? As billionaire investor Warren Buffett points out, I would stick to my circle of expertise and choose businesses that I felt I understood and could analyze.

I would look for a company that I thought could do well in the future and had a decent balance sheet. Too much debt can kill even a sturdy business.

For example, one stock that investors could consider is a stock Dunelm (LSE:DNLM). The company operates in an area that is likely to see sturdy long-term demand as people continue to look to decorate or renovate their living spaces.

With unique product lines and a enormous customer base, Dunelm has a solid competitive advantage in my opinion. The company has been consistently profitable, and I like its dividend record. It often pays special dividends when it has spare cash, although no company can guarantee that the dividend will be sustainable.

Over the last five years, Dunelm’s share price has increased by 47%. This means it has a price-to-earnings ratio (a common valuation metric) of 16, which I don’t think is a bargain, but I do think it’s fair for a company of Dunelm’s quality.

Starting your wealth building journey

Like any stock, Dunelm has risks. A faint real estate market, for example, can hurt sales and revenues. Managing risk, both evident and concealed, is a key skill for any investor and one I would like to hone from day one.

I would start buying shares by setting up a share trading account or stock exchange ISA and then look at what companies I found attractive as an investment at their current price.