Although the challenge and interest involved in choosing individual companies appeals to many people, others prefer to go for a less demanding route, opting to buy Unit Trusts, Investment Trusts or Exchange Traded Funds (ETFs), which invest in a range of shares.

The advantage of these is that they ‘spread’ risk by investing across a range of companies and can be used to focus on a particular sector or geographical area. Similarly, by tracking both index- linked and individual commodities, Exchange Traded Commodities (ETCs) offer exposure to a variety of commodities such as Brent Oil, Corn, Gold and Silver, and are a good way of diversifying your portfolio, (please note that some of these use complex products to get exposure, which increase the associate risk).

In this way even the small investor can have access to a slice of a very diversified range of investments. Real Estate Investment Trusts (REITs) offer a more simplified method of investing in UK commercial property in a highly tax efficient manner, traded like shares on the stock market.

In terms of timing, for the vast majority of people, the stock market should be viewed as a five year plus timescale for investing their money. You may be lucky enough to make gains over a much shorter period, but it’s a high risk strategy and not one that most of us can afford to try.

How you approach stock market investment and what strategy you adopt will depend on your personal circumstances - how old you are, whether you have years of work ahead, or you’re preparing for retirement, and whether you have children, grandchildren or elderly parents to provide for.

All of the above will have a bearing on whether you need income, or whether you are able to aim for long-term growth of your funds.

As well as the question of personal circumstances, there is the matter of individual temperament.

If you are happy taking risks, then the ups and downs of smaller companies won’t trouble you. But if you’re going to lie awake at night worrying about your shares, then choose something less volatile and more stable.

Stock market investment should be profitable, but it should also be fun! Again, conservative investors who are in it for the ‘long run’ will often have a proportion of their investments in larger companies, which are well-established and have a range of sources of profit, whereas more speculative investors often prefer smaller companies in the hope of making a quick profit (but, equally, running the risk of a rapid loss).

For investors with considerable time to go before retirement and a high pensionable income, a portfolio is likely to be structured for capital growth. Whilst it is likely to contain some blue chip stocks, it will also allow for less proven shares.

If, however, you’re nearing retirement and may need to top up your pension, the investments should be tailored towards income producing companies.

You may want to spread your risk even further through other instruments like government back debt (gilts). If you’re worried about getting the balance right, your stockbroker can help advise you on the make-up of a portfolio to suit your needs.

Another raft of fundamental question is focus on how much disposable income you have to invest, and over what period you want to invest it.

For example, do you have any major future financial outlay to consider? The total sum you have to put into the market will almost certainly influence the type of investments you make. If you want to achieve a well-balanced portfolio with maximum economies of scale, it should, ideally, be spread over at least ten different shares, each of a few thousand euros.

If you have less to invest, you might prefer to look at managed funds or vehicles like Exchange Traded Funds which can give you a wide spread with less risk than if you put all your funds directly into shares. Having decided what kind of investor you are, what investment strategy is right for you, and what types of companies meet your investment needs, the next step is to start to build your portfolio. At this stage, don’t rush things. Take your time in making your choices.

Knowledge will improve your chances of success, so get to know the companies and their markets. Do they have a strong competitive advantage, or any form of monopoly?

What do you think of their management? Are their own directors buying or selling shares? You can’t know everything, but once you feel you have a handle on the value of a company, you’re ready to get down to buying. And here, inevitably, the two key questions are when to buy and when to sell.