How To Invest in Tesla
If you’re an active investor, it is likely that you’ve considered investing in Tesla. And if you’re new to investing, you may not have learned how to invest in Tesla in the first place. Since the end of 2019, Tesla’s (Nasdaq: TSLA) stock has been climbing at an alarming rate. The stock went from a 52-week low of $44 to a 52-week high of over $502. But even with such rapid growth, many investors are still not biting.
One of the frequent criticisms you might hear about Tesla is that the stock is priced based on the company’s future potential and not on actual results. In a recent article, our very own Jody Chudley said “Tesla is the most overvalued stock on the market today.”
He went on to say “Tesla’s market valuation – relative to what the underlying business has actually accomplished – has gone from absurdity to outright madness. There is nothing fundamental going on at this company that merits this (stock price) in 2020. This will end badly for people buying shares today.”
Regardless of whether or not you think Tesla is a good investment… these four simple steps will teach you how to invest in Tesla, or any other stock for that matter.
How To Invest in Tesla Shares
1. Sign Up For an Investment Account
First you need to sign up for a brokerage account. Fidelity, Vanguard, Schwab, Webull and Robinhood are good options with low or no-cost fee structures. You can access their brokerage account options via their website or mobile app.
You also can invest directly through your retirement accounts. You might already have a 401(k) or an IRA set up through your employer. Additionally, a 529 college savings account can be a good way to start investing in Tesla.
It is also important to read all the information presented in your brokerage account. This could be anything from fee structures to promotions and more.
2. Link Your Bank Account and Add Funds
Now that your account is approved and active, you’ll need to link your bank account to your brokerage account. There are usually a couple ways you can do this, depending on the broker. Once your bank account is linked, you can transfer funds into your brokerage account. It may take some time for the cash amount to register, but some trading platforms grant you “buying power” to start making trades right away.
Depending on whether this is a retirement account, college savings account or individual brokerage account, your investment approach should vary. We recommend setting a budget for how much you’ll invest each month.
3. Place a Limit Order
Now that you’ve made your deposit, it’s time to place your first order. You’ll need to decide how many shares you’d like to purchase and at what price. You have two options here… a market order or a limit order. We recommend ALWAYS using a limit order.
A limit order sets a specific price (limit price) that is the highest a buyer will pay or the lowest a seller wants to receive. The buyer will accept a price at or lower than the limit and a seller will accept a price at or higher than the limit. If the stock or option hits that price during the day, your order will be filled. If not, the order is canceled and you have the option to invest in Tesla the following day.
4. Keep Track of Your Investments
Whether it’s your house, your car, your health or your investments… keeping a close eye on things is important. As it is with everything in life… things change. Sometimes a stock will fail because of poor leadership, low earnings or even unforeseen external forces. On the other hand, many stocks thrive and surpass company growth expectations. It’s important to understand the changing nature of the market and how that will impact your investments in the long run.
Final Thoughts on How to Invest in Tesla
Now that you’ve learned how to invest in Tesla… whether or not you actually do so is completely up to you. Whether it’s Tesla, Google (Nasdaq: GOOG), Amazon (Nasdaq: AMZN), Apple (Nasdaq: AAPL) or some other stock… you now have all the tools you need to start investing and building wealth.
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