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Here’s how to buy Tesla stock.
Tesla, Inc.; Insider
You can buy Tesla stock by setting up an account with a brokerage or online investment platform.
Before buying shares of Tesla stock, it’s important to do research on the company to determine if it’s right for you.
After you’ve purchased shares, you’ll need to choose an investment strategy and regularly monitor your investment.
Tesla has long been a popular stock. The company, led by Elon Musk, has revolutionized the automotive industry with its offering of futuristic electric vehicles. And despite numerous price swings, it has seen quite the surge in value since the stock’s public debut in 2010. In fact, its 10-year average annual return is currently more than 65%.
Eager to get in on the action? There are a few ways to do so. If you’re not interested in the financial advisor or investment firm routes, you can purchase shares on your own by setting up an account with an online brokerage or investment platform.
1. Set up a brokerage account
If you haven’t already started trading on your own, you’ll need a brokerage account to purchase shares of Tesla, according to Cassandra Kirby, Partner, COO, CCO, and Private Wealth Advisor at Braun-Bostich & Associates.
“You can purchase Tesla shares by establishing a brokerage account through a trading platform like TD Ameritrade, E*Trade, or Charles Schwab, to name a few,” she explains.
Brokerage accounts are digital vehicles that allow you to purchase investments like stocks, ETFs, options, bonds, mutual funds, and more. You can invest in Tesla through taxable individual or joint brokerage accounts. You can also use IRAs, though retirement accounts might not be the best move for the stock due to its volatile nature.
“Make sure you do your due diligence on the platform you choose and be mindful of transactional costs so there are not any surprises when you begin trading,” Kirby says. “Alternatively, you could hire a financial advisor.”
The best brokerage accounts offer features like commission-free trading (meaning you won’t pay a fee each time you buy a certain type of investment; you’ll only be responsible for that asset’s share price) and fractional shares.
Quick tip: You don’t have to solely rely on full or fractional shares of TSLA to get a piece of the company. You can also invest in index funds containing Tesla (e.g., the Vanguard 500 Index Fund (VFIAX) or Fidelity MSCI Consumer Discretionary Index ETF (FDIS).
“An index fund that houses Tesla shares may provide you with greater diversification because you are purchasing a basket of stocks rather than just Tesla stock,” says Kirby. “This could be an advantage or a disadvantage and depends upon your appetite for risk and your investment timeframe, as well as the future outlook for Tesla stock versus the other stocks held in the index fund.”
If you’re thinking of investing in Tesla stock, you can buy shares without commissions, depending on the brokerage you choose. Plus, as of September 27, 2022, its current value sits at more than $285. If this price is too much per share, you can purchase portions of the full share price. For instance, once you reach the point of placing an order, you can select a dollar amount to invest in Tesla, as opposed to a share amount.
2. Research Tesla’s financials
This step is necessary for any investment you add to your portfolio. And luckily, it doesn’t have to be an entirely speculative process. Several resources — including company quarterly earnings reports, balance sheets, income statements, and expert analysis and research reports — are all useful in evaluating a stock like Tesla both from a historical and current perspective.
Both lenses are necessary in determining how many shares you should buy and how long you should park your money in them. In addition, you’ll want to keep up with news concerning both the company, its industry, and the economy, as all factors can impact investor demand and directly affect whether Tesla rises or falls in value.
In addition, Tesla has a proven record of volatility, so it may not be best for investors in search of a fairly stable asset, nor is it likely a good idea for someone close to retirement. Generally, Tesla stock best suits those who can endure drastic movements in share price.
3. Determine how much to invest and place an order
There isn’t a one-size-fits-all initial investment amount when it comes to purchasing shares of a stock for the first time. Both the investment amount and number of shares will vary according to each trader’s personal finances, risk tolerance, investing goals, and time horizon.
When investing in a stock for the first time, Kirby explains, it’s important to remain mindful of the stock’s risk as well as its potential for gain or loss. “Be sure you do not allocate too much of your portfolio to one stock,” she says. “We typically advise no more than 5% of your total investable assets to one individual stock.”
Here are a few other considerations as you decide: How much risk are you comfortable with? How long do you want to invest? What are your target returns?
It’s crucial to make sure you have both an emergency fund (or a fund that covers three to six months of living expenses) and budget in place before you select both your investment amount and frequency of contributions.
Once you’re ready to place an order, you’ll then have to choose the type of order you want. New traders should note that order types basically give you some control over the price at which your order executes on the market. There are generally four types:
Market order: These orders are usually executed immediately, but you have no control over the price at which they execute. This could be a drawback in rapidly volatile markets since you can’t set your desired order execution price.Limit order: With limit orders, you can set a price boundary for your purchase, telling the exchange that you only want it to execute at that price or better. If the exchange can’t meet these criteria, the order won’t be filled.Stop order: Also known as a stop-loss order, these orders tell the brokerage to execute a trade only when the shares reach a certain price (i.e., the stop price). Once the stock reaches this value, the order becomes a market order and executes immediately.Stop-limit order: Like stop orders, stop-limit orders let you set a stop price for your purchase. Once, or if, the value of Tesla stock reaches that price, the order becomes a limit order, and it’ll execute at that price or better.
After you’ve allocated a reasonable amount toward Tesla, you’ll need to develop an investment strategy to both maintain and grow those shares.
4. Review your purchase and monitor your investment
Unless you’re day trading, you don’t necessarily have to (nor should you) monitor your stock’s price around the clock. But it’s important to regularly check in on its performance while developing a wealth-building strategy that aligns with your financial situation and investing goals.
You can generally approach the Tesla investment process through a couple of strategies:
Buy-and-hold: With this strategy, you can invest a lump sum in Tesla and hold it for the long-term or for a set period of time before selling and cashing out your shares.Dollar-cost averaging: This approach is great for those who want to invest in Tesla periodically. With dollar-cost averaging, you set both an investment amount and the frequency (e.g., days, weeks, months, or years) at which you’ll regularly buy more shares.
These simple steps can help you maintain your investment and see it generate returns, although it’s important to understand that your stock’s value will likely fluctuate due to factors beyond your control.
If you ever feel it’s best for you to sell, you can do so by going to the “trade” section of your investment platform’s website or mobile app (or if you don’t have signal, you can call your brokerage to have them conduct a representative-assisted trade for a fee). You can typically either sell a number of shares, or a dollar amount. Note, though, that you’ll incur capital gains taxes on the assets you sold.
The bottom line
If you’re buying Tesla stock for the first time, you’ll need to set up a brokerage account to get started. It’s also wise to do your due diligence on Tesla’s financials and performance before deciding whether the company is a good fit for your risk tolerance and investing goals.
While you can purchase shares of the company either directly, through individual stock, or indirectly through index or mutual funds that contain Tesla, it’s nonetheless important to trade with a strategy that both suits your skill level and goals and preserves your emergency fund and budget.