You probably won’t be able to give Elon Musk your entire paycheck. To figure out how much you can afford to invest in TSLA, you’ll need to ask yourself a few questions.
- What is your financial plan? After you’ve paid all of your monthly bills, you can save and invest whatever money you have left. If you don’t already have one, you should put at least some of that money into an emergency fund, as well as retirement savings. The rest, however, can be directed toward other assets, such as Tesla.
- What is the current price of TSLA? Stock prices fluctuate all the time, but Tesla’s stock has been trading at more than $400 a share for the past year. As a result, you might not be able to purchase a whole share of TSLA quite now. Fortunately, several brokerages, such as Charles Schwab, Robinhood, Fidelity, and Stash, allow you to acquire fractional shares of stocks.
- What is your approach to investing? The majority of people invest in one of two ways: enormous lump sums all at once or little amounts over time. This latter strategy, known as dollar-cost averaging, can help you reduce your risk and spend less per share on average over time.
- What about the rest of your assets? If you’re already an investor, you should consider how Tesla fits into your portfolio. “According to Chip Workman, a certified financial planner (CFP) with The Asset Advisory Group, “every individual stock purchase should play a relatively minimal impact in the average investor’s portfolio.” “A decent rule of thumb is that no single stock should account for more than 5% of a portfolio’s value.”
Review Tesla’s Performance and Potential
It’s a good idea to do some study into Tesla’s financials, performance, and future outlook before buying Tesla stockor any stock, for that matter. The annual reports (Form 10-K) and quarterly reports of a firm are the best places to start (Form 10-Q). Companies that are publicly traded, such as Tesla, are obligated to provide specific financial information in these reports.
These can be found on Tesla’s investor relations website or in the Securities and Exchange Commission’s (SEC) database.
You could also seek advice from specialists. Brokerage firms routinely issue commentary on key stocks and industries, while third-party evaluators such as Morningstar give in-depth research.
You’ll be able to select how much of your money you want to put into Tesla when you combine financial facts with expert knowledge.
Decide Your Order Type and Place It
You can purchase your first Tesla shares once you’ve decided how much you wish to invest. Log into your brokerage account and type in Tesla’s ticker symbol (TSLA), as well as the number of shares or dollar amount you want to invest.
You can buy shares at their current price with a basic market order, or you can use a more sophisticated order type like limit or stop to acquire TSLA only if its price falls below a specified level.
Because Tesla is traded on the Nasdaq exchange, you can buy it from 9:30 a.m. to 4:00 p.m. ET Monday through Friday. You can continue to place orders for a few hours before or after the market opens if your brokerage offers pre-market and after-market trading. Any orders submitted outside of the trading hours will be filled as soon as the exchange reopens.
Evaluate Your Investment
Whether you invest in Tesla or other securities, it’s a good idea to monitor their performance on a regular basis.
Starting with annualized percent return is arguably the most straightforward option. This allows you to compare TSLA’s performance over the course of a year to that of other companies or investments. You can also check Tesla’s financial data to see if it’s still going in the right path.
You may also wish to compare TSLA’s performance to industry benchmarks, such as the S&P 500 and Nasdaq Composite Index, in addition to other stocks. This will show you how Tesla is performing in comparison to the rest of the market.
Open a Brokerage Account
You’ll need to open a brokerage account to purchase and sell securities like stocks, mutual funds, and exchange-traded funds (ETFs). However, a brokerage is more than just a way to ride TSLA to the moon. It also includes all of the information and instruction you’ll need to be a successful investor, as well as many sorts of investment accounts tailored to specific objectives.
Tax-advantaged accounts are probably better for long-term investing, such as for retirement or a child’s college fund. Individual retirement accounts (IRAs) and 529s, for example, receive a unique tax credit from Uncle Sam, which can help your money grow even faster. However, you can only access the money in them without penalty at specific times (like as retirement) or for specific causes (such as your child’s educational expenses).
A taxable brokerage account is best if you want greater flexibility with your investment accountfor example, if you want to save for your own Telsa in the next several years. These allow you to invest for any reason or for any length of time, albeit you will have to pay taxes each time you sell an investment or earn dividend income.
Because not all brokerages are made equal, you should examine the fees, available investments, and services offered by at least a handful to figure out which one is best for you. You can also look through our recommendations for the finest online brokers.
Purchasing Tesla stock is simple once you’ve chosen the right brokerage for you: Simply enter its ticker symbolTSLAalong with the number of shares you want to purchase. You can also specify a monetary amount and let your broker figure out how many shares (or sections of shares) you can purchase.
Purchasing TSLA, however, does not end here. To make sure you’re investing your money as wisely as possible, follow the next four steps.
Is Tesla a bond holder?
Tesla (TSLA) issued 7-year bonds with a 5.3 percent coupon in August 2017. One of the conditions permits Tesla to redeem the bonds early, albeit at a price that is higher than the face value, which lowers each August 15 as the maturity date approaches.
Tesla has just declared that it will redeem the bonds on August 15, 2021, when the next premium stepdown occurs. To redeem these notes, Tesla will pay $1.8477 billion, or over $48 million more than the face value. Of course, it will save $95.4 million in interest over the following four years, so this redemption makes financial sense, especially because Tesla now has a large cash balance sheet.
Alternatively, if Tesla decides to keep its cash balance or may have a need for it, I am convinced that it can borrow $1.8 billion of unsecured debt due in 2025 at a significantly cheaper rate than the 5.3 percent it is currently paying. Given Tesla’s improved financial status and the present extraordinarily low interest rate environment, as well as a shorter maturity date, Tesla would most likely be able to borrow at 3% or less. Tesla would save approximately $36 million per year in interest costs if the interest rate was lowered by 2%, implying that the $48 million debt premium would be paid off in less than a year and a half.
Are Tesla’s bonds worthless?
Tesla’s bonds were upgraded to BB from BB- by S&P Global Ratings. Tesla’s new rating is just one notch below BB+, the highest S&P rating in the high-yieldor “junk”category. BBB-, the lowest investment-grade rung, is the next step up from BB+.
Are Tesla bonds affordable or prohibitively expensive?
Finally, we believe that Tesla’s improving credit outlook is mostly due to its ever-increasing stock price. In this context, Tesla’s bonds appear to be excessively pricey for its rating, but far cheaper in terms of risk, when compared to rivals.
Is it possible to acquire Tesla stock directly?
Tesla’s stock trades under the ticker name TSLA on the NASDAQ exchange. You’ll need to work with a broker to obtain shares. Tesla does not have a direct stock purchase program at this time.
Tesla issues what kind of bonds?
Tesla has used convertible debt, or bonds that can be converted into common stock if the stock price rises enough, to fund its expansion and growth since 2013. As I already stated in September:
“In 2013, it issued $600 million in convertible bonds, followed by $2 billion in 2014, $850 million in 2017, and an additional $1.6 billion in 2019.”
What’s the story behind Tesla’s fixation with convertible debt? Tesla, it turns out, is nearly the poster child for issuers of convertible bonds. A non-investment grade, high-growth company that isn’t a classic straight debt issuer is a typical convertible issuer. Tesla, in particular, is a speculative grade technology business. Tesla’s first convertible bond was not even rated by one of the main credit rating firms when it was issued in 2013…. Tesla was able to get away with providing its investors a very low couponthat is, the annual interest rate paid until the bond maturesby issuing convertible bonds. For example, its 7-year convertible bond, which was issued in February 2014 and will mature on March 1, 2021, had a rate of 1.25 percent, while its 5-year convertible bond, which was issued in 2014, had a coupon of 0.25 percent!
How much does a Tesla bond cost?
With the rise in Tesla stock, the converts are now trading at a significant premium to their face value of 100, thus making them surrogates for the stock. The largest, the 2% bond, was issued in May and has a face value of $1.8 billion. According to Bloomberg data, it closed Tuesday at a new high of $294.
What is the procedure for purchasing bonds from a company?
When investing directly in individual corporate bonds, the investor should have a thorough understanding of the issuing company’s fundamentals. This assists the investor in ensuring that they do not purchase a risky asset. The danger of default on corporate bonds is uncommon; yet, it should not be overlooked when making investment decisions.
To avoid the burden of conducting a fundamental examination of a company, one can invest in corporate bond mutual funds or ETFs, which provide diversification and professional management. The risk connected with this investing option is different than the risk associated with buying individual bonds. Investing in corporate bonds simplifies the analysis process because the investor only needs to look at the holdings of that specific fund to determine whether or not to purchase it. For example, if an XYZ scheme invests only in AAA corporate bonds, an investor will have less evidence to confirm before investing.
How do you go about purchasing convertible bonds?
Convertible bonds are a type of hybrid security that has the characteristics of both bonds and stocks in terms of return. Convertible bonds can be exchanged for a specific number of shares of the issuer’s common stock. Individual convertible bonds should be obtained through a broker with a convertible bond desk. Closed end funds, or CEFs, provide the best chance for do-it-yourself investors to invest in convertible securities.
What exactly is a bond?
Governments and enterprises utilize bonds, also known as fixed income instruments, to raise funds by borrowing from investors. Typically, bonds are issued to raise funding for specific projects. In exchange, the bond issuer pledges to repay the investment, plus interest, over a certain time period.
Credit agencies score certain types of bonds, such as corporate and government bonds, to assist establish their quality. These ratings are used to determine the possibility of investors being paid back. Bond ratings are often divided into two categories: investment grade (better rated) and high yield (lower rated) (lower rated).
- Corporate bonds are debt instruments that a corporation issues to raise funds for expansion, research, and development. You must pay taxes on the interest you earn on corporate bonds. To compensate for this disadvantage, corporate bonds typically offer greater rates than government or municipal bonds.
- A city, municipality, or state may issue municipal bonds to collect funds for public projects such as schools, roads, and hospitals. Municipal bond interest is tax-free, unlike corporate bond interest. Municipal bonds are divided into two categories: general obligation and revenue.
- General obligation bonds are used by municipalities to fund projects that do not generate revenue, such as playgrounds and parks. Because general obligation bonds are backed by the issuing municipality’s full faith and credit, the issuer can take whatever steps are necessary to ensure bond payments, such as raising taxes.
- Revenue bonds, on the other hand, repay investors with the predicted revenue they generate. If a state issues revenue bonds to fund a new roadway, for example, toll money would be used to pay bondholders. Federal taxes are exempt from both general obligation and revenue bonds, and state and local taxes are frequently excluded from local municipal bonds. Revenue bonds are an excellent method to put money into a community while also earning money.
- The United States government issues Treasury bonds (commonly known as T-bonds). Treasury bonds are deemed risk-free since they are backed by the United States government’s full faith and credit. Treasury bonds, on the other hand, do not pay as high an interest rate as business bonds. Treasury bonds are taxed at the federal level, but not at the state or local level.
Other types of bonds
- Bond funds are mutual funds that invest in a wide range of bonds, including corporate, municipal, Treasury, and junk bonds. Bank accounts, money market accounts, and certificates of deposit often yield lower interest rates than bond funds. Bond funds allow you to invest in a wide selection of bonds managed by expert money managers for a modest investment minimum ranging from a few hundred to a few thousand dollars. Keep the following in mind when investing in bond funds:
- Bond funds’ revenue can fluctuate because they often invest in multiple types of bonds.
- If you sell your shares within 60 to 90 days, you may be charged a redemption fee.
- Junk bonds are high-yield corporate bonds that have been rated below investment grade. While these bonds provide greater yields, they are referred to as trash bonds since they have a larger risk of default than investment grade bonds. Investors with a low risk tolerance may wish to stay away from junk bonds.