How to start investing in stocks: This ASX 200 share is where I’d begin

This could be a great time to start investing in stocks. Here’s an ASX 200 share that I think is worth considering.

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A happy, smiling woman rides on the back of a trolley down the aisles of a supermarket representing Coles shares as an ideal stock to buy for beginners investing in the ASX 200

Image source: Getty Images

Key points

  • There's been volatility and fear on the ASX share market this year 
  • It may not feel like a great time to start investing
  • But history shows it is usually a good idea to buy low

It may seem like a pretty scary time to have your money invested in ASX 200 shares.

After all, the S&P/ASX 200 Index (ASX: XJO) is down 14% over 2022 thus far. And many prominent ASX 200 shares have fallen far further than that.

But the reality is that periods like the one we’re in have often proven to be a perfect time to get started in investing. As the saying goes, ‘buy low, sell high’.

But where should one get started? There are hundreds of ASX shares to choose from. Not to mention exchange-traded funds (ETFs) or international shares.

I’ve talked about the conglomerate Washington H. Soul Pattinson and Co Ltd (ASX: SOL) before, and why I think that company is a good starting point. Well, here is another ASX 200 share investment that I personally think would also make a fantastic starting point.

Start with this ASX 200 share

It’s Coles Group Ltd (ASX: COL).

We all know Coles. It’s the second-largest supermarket chain in Australia, and services millions of Australians every year.

So, why this ASX 200 share?

Well, I think it’s important for a beginner to understand they are investing in a business, not just a share.

Coles is not an overly complicated business. Most of us would be able to get a handle on how a supermarket makes a crust. Plus, I think it is beneficial for a new investor to be able to go to one of ‘their’ stores and see how the business works and fares.

In addition, Coles is arguably a fairly safe investment. That doesn’t mean its shares can’t fall dramatically in value from time to time. But we all need (and will keep needing) to eat. That doesn’t change if the economy is in recession, if we have high inflation (or deflation, for that matter), or if interest rates go up.

Many Australians use Coles to fulfil this basic need, and I don’t see this changing too much in the future. It’s an efficient business that will arguably always be fairly competitive when it comes to the prices of food, drinks, and household essentials.

The benefits of dividends

Coles shares also pay a pretty robust dividend. At present, its shares offer a dividend yield of 3.6%, which also comes with full franking credits. I also believe a dividend-paying share is a great thing for a beginner investor, since it demonstrates how owning shares of a business can put money back into your pocket.

If an investor bought Coles shares today as their first investment, they can likely expect their first dividend payment in September.

No business is perfect, and Coles is certainly not a ‘double your money in two weeks’ kind of stock. But that’s precisely why I think it will make for a great starting ASX 200 share.

Motley Fool contributor Sebastian Bowen has positions in Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended COLESGROUP DEF SET and Washington H. Soul Pattinson and Company Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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