How to Buy Tesla (TSLA) Stock

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Whether they admire Elon Musk or simply appreciate the look and performance of his company's cars, Tesla fans are devoted. It's not hard to see why: from bio-weapon defense-mode vehicles to solar rooftops, Tesla (TSLA) is a major industry disruptor.

This has resulted in an impressive return on investment. Tesla's revenue is up  98% year-over-year, and its stock is up nearly 80% year-over-year, according to its latest earnings report. If all of this makes you want to get involved in Tesla's electrification development, here's everything you need to know about buying TSLA stock.

How to buy Tesla stock (TSLA) 

1. Open a brokerage account

Opening a brokerage account is your key to buying and selling securities, such as stocks, mutual funds, and exchange-traded funds (ETFs). However, a brokerage firm is more than just your ticket to the moon TSLA. It also contains all the research and education you need to become a successful investor, as well as different types of investment accounts designed for specific goals.

If you're investing for your retirement, choose a tax-saving Individual Retirement Account (IRA). This type of account is tax-free from Uncle Sam which can help your money grow even faster.

If you want more flexibility with your investment account - say you want to save for your own Tesla over the next few years - you may want to have a taxable brokerage account. These allow you to invest for any purpose or period of time, although you have to pay taxes each time you sell an investment for a profit or receive dividend income.

Not all brokers are created equal, so you will want to be sure to compare the fees, available investments, and services offered by at least some to determine which one is right for you. You can also check out our picks for the best online brokers.

2. Decide How Much to Invest

You probably aren’t able to sign over your whole paycheck to Elon Musk. That means you’ll have to ask yourself a few questions to figure out how much you can afford to invest in TSLA.

What’s your budget? After you’ve paid all your expenses for the month, you’re free to save and invest whatever you have left. Ideally, you should put at least part of it into an emergency fund, if you don't already have one, as well as retirement savings. But the rest you can spend on other investments, like Tesla.

What is the current price of TSLA? Stock prices are always volatile, but Tesla's stock price has hit $400 per share over the past year. For this reason, you may not be able to purchase the entire TSLA part. Fortunately, some brokerages, such as Charles Schwab, Robinhood, Fidelity, and Stash, allow you to buy portions of stock known as fractional shares.

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What is your investment strategy? Most people choose to invest in one of two main ways: with a large sum all at once, or with a small amount over time. This second method, called dollar-cost averaging, can reduce your risk and help you pay less per share on average over time.

What about your other investments? If you've invested, you want to make sure you're thinking about where Tesla should be in your portfolio. "Any individual stock purchase should play a relatively small role in an investor's portfolio," said Chip Workman,  certified financial planner (CFP) at The Asset Advisory Group. average quarter. "A general rule of thumb is that no individual stock should represent more than 5% of a portfolio."

3. Test Tesla's Performance and Potential

Before buying Tesla stock - or any stock - it's wise to research the company's financials, performance, and future prospects. The easiest place to start is by using the company's annual reports (Form 10K) and quarterly reports (Form 10Q). Public companies like TSLA are required to disclose details of their financial health therein.

You can find them on the Tesla Investor Relations website or by searching the Securities and Exchange Commission (SEC) database.

You can also look to experts for advice. Brokerage firms regularly publish commentary on major stocks and industries, and third-party reviewers like Morningstar provide a comprehensive analysis.

When you combine financial data with expert information, you'll be able to decide how much you want to invest in Tesla.

4. Decide Your Order Type and Place It

Once you’ve decided how much you want to invest in Tesla, you can buy your first shares. You’ll need to log into your brokerage account and enter Tesla’s ticker symbol (TSLA) and the number of shares you want to buy or the dollar amount you want to invest.

You can use a simple market order to buy shares at their current price, or you can try a more sophisticated order type, like limit or stop, to purchase TSLA only if its price falls below a certain threshold.

Because Tesla is traded on the Nasdaq exchange, you can buy it Monday through Friday from 9:30 a.m. until 4:00 p.m. ET. If your broker offers access to pre-and post-market trading, you can continue to execute trades for several hours before or after the market opens. Any orders received outside of your trading hours will be placed as soon as the exchange reopens.

5. Evaluate Your Investment  Whether you are investing in Tesla or other securities, you should periodically check their performance.

It's probably easiest to start with an annual percentage return. This way, you can compare TSLA's performance over a year with other companies or investments. You can also review Tesla's financial information to make sure it's still moving in a positive direction.

In addition to comparing TSLA's performance with the performance of other stocks, you can also measure it against industry benchmarks, such as the SandP 500 and the Nasdaq Composite Index. This will give you an idea of ​​how Tesla is doing compared to the market as a whole.

How to Sell Tesla Stock

When you're ready to sell your Tesla stock, go to your brokerage's trading platform and enter the number of shares or dollar value you'd like to sell. You will also be able to select an order type here depending on whether you want to sell at the current price or wait for a specific price.

If you sell your stock for more than you paid and receive a profit, called capital gain, you will likely have to pay taxes, unless you are selling shares held in tax-advantaged accounts.

These capital gains taxes may vary depending on how long you hold your TSLA stock. If you notice a large return on your Tesla investment, you should talk to a financial professional about the impact the sale will have on your income taxes.

How invest in Tesla with a Tesla index fund (or any stock, for that matter) can be a very volatile investment.

You can reduce your risk of seeing extreme highs and lows by diversifying your investments. An index fund, for example, holds hundreds or thousands of individual stocks and is "the easiest way to diversify your portfolio," according to Valerie Rivera,  CFP at Facet Wealth. The

TSLA is currently about 1.5% of the SandP 500, which means that 1.5% of every dollar you invest in the SandP 500 index fund goes to Tesla. If you want an index with greater TSLA representation, you might consider investing in the Nasdaq index fund, where Tesla holds nearly 4% of the shares.

If you're not sure whether to invest in stocks or mutual funds, if you're not sure how much you can invest, or if you're not sure what investment strategy to use, see a financial advisor mainly for individual consultation.

 

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