Tesla has become one of the major industry disruptors in recent times. Its products and CEO have made their presence felt in the marketplace in an unprecedented fashion. Hence, Tesla has acquired legions of fans, followers and investors.
So how do you buy Tesla stock directly? The short answer is you can’t. Read on to find out how you can invest in Tesla without buying stock directly.
Check Out Tesla’s Fundamentals
The first and foremost task is to check out the company’s fundamentals. Just because it’s popular and trending on social media does not preclude the need to do this basic research and look at how the business is performing.
You can look at analysis, balance sheets, income statements, competition and management.
Quantitative and qualitative research will give you a deeper understanding of the company’s financial position and help you focus on revenue, net income, earnings and returns.
Once you have gathered your research, you need to put it all into context. With all the metrics and calculations, you should be able to gauge the intrinsic value of Tesla’s stock.
But that doesn’t give you full insight, and for this you need to look at long term performance.
How Tesla has gotten through tough times and its reactions to challenges in the marketplace can help to clarify how it deals with adversity and how it delivers to shareholders.
Does Tesla Stock Fit Into Your Portfolio?
Now you need to see if Tesla stock is a good fit for your portfolio. A healthy portfolio is a diversified portfolio. It is good practice to spread your risk by having a variety of stocks from different companies, industries and geographical locations.
If you are already investing in a number of automobile companies, then perhaps you should reconsider or try to diversify your portfolio a little. Problems which affect the automotive industry will impact the entire sector and therefore your whole portfolio.
The easiest way to diversify is to buy index or mutual funds. These basically bundle together stocks from different companies and industries to minimize the risk if a particular sector suffers big losses.
Having said that, your decision to buy Tesla stock will depend on your long term goals and your risk tolerance.
Climate change has shifted focus on how we travel, and this is unlikely to revert at any point as oil reserves deplete and the need for cleaner fuel is more pronounced.
Set A Budget
So the decision is made, you are going to buy Tesla stock. But how much should you buy? Budgeting for stock purchasing should not include any money that you will need in the immediate future. Investing is usually a long term financial commitment.
It is advisable to set up an emergency fund to cover at least three to six months of expenses and pay off any high interest debts before setting your investment budget. Then decide on the amount that you want to invest and stick to it.
There is no right amount, and your decision to invest should be based on your financial goals, taking into account any other investments that you already have.
Ways To Buy Tesla Stock
Tesla trades on the NASDAQ exchange under the ticker symbol TSLA. It doesn’t offer the option to buy Tesla shares directly, so they will need to be bought through an online brokerage account.
To purchase full shares, you need to pay the full market price at the time of purchase. Tesla stock is currently trading at around $758 per share. Calculate how many you can buy with your predetermined budget.
If your budget doesn’t stretch to full shares, you can buy fractional shares in Tesla. Many brokerages offer this service, and you can usually buy any percentage of a share.
When To Buy Tesla Stock
Timing is key when buying stock, so how do you know when you should take the plunge? There are a few options, all with different strategies.
This is when you simply place an order for the stocks, and you will pay the best price possible at the time of your order. However, Tesla is a fast moving stock and by the time the order is processed the price may have changed, up or down.
Another option is to put in a limit order, which means the trade only goes through once the shares have reached a pre-set price or lower.
This can help you determine how much you pay, but it risks the price never reaching that limit or enough shares becoming available.
Dollar Cost Averaging
For long term investments, you can spread purchases over time at regular intervals. This takes away the guesswork of when to buy. You can combine this strategy with the limit order option too.
Opening A Brokerage Account
So to buy Tesla stock, you will need a brokerage account. You can open an account with a licensed brokerage firm either online or have a full service account. Online accounts are typically cheaper.
Look for an account that has no account fee, no trading commissions and no inactivity fee. You will need to enter your personal information, and you can transfer money into and out of your brokerage account much like a checking account.
So, although you cannot buy Tesla stock directly, it is possible to invest in the company via a brokerage account. With the option to buy either full or fractional shares, you can add to your portfolio depending on how much you want to invest.
You can also decide whether to go ahead and buy shares immediately with a market order or when the price comes more in line with your budget via limit orders.
For those with long term investment strategies, a dollar cost averaging approach may work well with Tesla stock.
While also taking care to keep your portfolio diversified, investing in a future oriented stock like Tesla could be a good call for your investment goals. .
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