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Even if this company’s name is somewhat unfamiliar, chances are you’ve used NVIDIA’s products in a gaming console or a personal computer. Today, NVIDIA dominates the market for graphics processing units, and in the future it’s products could form the backbone of artificial intelligence (AI) computing applications like self-driving cars.
That exciting potential has driven NVIDIA’s strong performance: In 2021, its third-quarter revenue grew 50% year over year, and its stock price rose nearly 127% on the year. Forward-thinking investors may want to include this cutting-edge large-cap stock in their portfolio. Here’s how to buy NVIDIA stock in five simple steps.
How to Buy NVIDIA (NVDA) Stock
1. Open a Brokerage Account
The first step to purchasing any stock is opening a brokerage account, if you don’t have one already. (If you do, you can skip to step 2.)
You’ll want a brokerage account with no trading fees and low account minimums. To get a head start on which may work best for you, check out Forbes Advisor’s lists of the best brokerages and investment apps.
When you’re deciding on a brokerage, you should also consider your investing goals. Are you aiming to save for retirement? In that case, go with an individual retirement account (IRA), which is like a personal 401(k). It provides you with tax breaks, with a catch. If you need to withdraw money in the account before you’re at least 59 ½, you may have to pay taxes and a penalty in most cases.
If you’re investing for shorter-term goals, you probably should go with a taxable brokerage account. While you don’t get the tax benefits of an IRA, you’re able to deposit as much money in the account as you like, and take out your profits whenever you need them. You also may be able to take advantage of tax-loss harvesting.
2. Figure Out How Much You Can Invest
Chances are you aren’t about to go all in on NVDA. But you may not be sure what exactly the right amount to invest in it is. Asking yourself the following questions can help you figure out how much NVIDIA to buy.
- What’s your budget? Your investing budget should come from the money you have left at the end of the month after paying your bills, saving an emergency fund and contributing to your retirement. If you are planning on investing in individual stocks before covering those bases, you may find yourself in a difficult financial situation if you unexpectedly need the money you invest.
- What’s NVDA’s current price? While stock prices will fluctuate over time, it’s good to keep an eye on both the stock’s current price and where it has been recently as it may inform how much of it you can buy. NVIDIA stock has cost a little as $130 per share and as much as $330 per share during the 2021 calendar year. That’s important to keep in mind because not all brokerages allow you to purchase fractional shares, or portions of whole stock shares, and you may find yourself facing a very expensive investment if you have to buy whole shares. Luckily, some brokerages, including Charles Schwab and Fidelity, as well as most investing apps, including Stash and Robinhood, allow you to buy fractional shares.
- What’s your investing strategy? Will you make one big purchase or buy small pieces steadily over time? If you don’t have a lot of money ready to invest already, you may prefer the latter method, also known as dollar-cost averaging. By buying the same dollar amount of the stock at regular intervals, regardless of the stock price at the time of purchase, you may pay less per share on average over the long term. You’ll also decrease the risk that you buy a lot when prices are high and very little when they’re low.
- What about your other investments? Presumably NVIDIA will not be your only investment. So how does it complement your other investments? Will it be one of several large-cap technology stocks in your portfolio or will it represent your entire exposure in that market? Making sure you have a diversified portfolio that covers several different industries and company sizes can help ensure balanced, healthy growth.
3. Evaluate NVIDIA’s Finances
Despite impressive past performance, you don’t want to buy NVDA blind to its fundamentals and current financial situation.
To determine NVIDIA’s financial health, start with the information on the company’s investor relations website. The Securities and Exchange Commission (SEC) requires publicly traded companies to file Form 10-K annual reports and Form 10-Q quarterly reports. You can find this information on its investor relations site as well as the SEC’s database.
Newbie investors will also find it helpful to turn to resources like Morningstar or your brokerage’s research offerings for expert analysis on NVIDIA’s quarterly and annual reports. These can help you better understand how the company’s finances have fared over time.
4. Place Your Order
To buy NVIDIA, log into your brokerage account or investment app and complete an order form. You’ll need to enter the company’s ticker symbol, NVDA, as well as the amount of shares or dollar value you want.
You may have the option of specifying an order type. The most common are market orders and limit orders.
With a market order, you will request to make a purchase at the stock’s best current price. This usually means you can expect an immediate sale, but there is no guarantee of a specific price. If you have no choice in how you make your purchase, it’s probably a market order by default.
Meanwhile, if you want to be sure you only buy NVDA if it’s at a certain price, you can choose what’s called a limit order. This allows you to set a firm amount on the amount you want to spend, and if the stock’s price rises above it, your order won’t go through.
Since NVIDIA trades on the Nasdaq exchange, you can buy it from 9:30 a.m. to 4:00 p.m. ET, Monday through Friday. You may also have access to pre- and post-market hours through your brokerage.
5. Evaluate NVIDIA’s Performance
Investing is not a one-and-done task. Even after you have purchased your NVIDIA stock, it’s important to periodically review your stock’s performance so you can decide if it still meets the goals you set for it.
Start by looking at how much NVIDIA’s price has risen over the past year to compare it to other assets in your portfolio, other technology stocks (either ones you own or others that are doing well) and benchmarks like the Nasdaq Composite Index or the S&P 500. You may also want to revisit the financial information you looked at when you decided to buy NVDA to begin with and track how that’s changed over time.
How to Sell NVIDIA Stock
Chances are you won’t keep your NVDA forever. Even long-term investors eventually sell their holdings.
To sell your NVIDIA stock, you simply have to log into your investment account, enter its ticker symbol and the amount you want to sell and complete a market or limit order.
Hopefully, you’re selling at a profit, meaning you may owe taxes. If you’re selling from a taxable investment account and have seen large gains, you may wish to speak with a tax professional to discuss the best ways you can manage them.
Other Ways to Invest in NVIDIA
Buying individual shares of NVIDIA is only one way to benefit from its growth. You can also take a safer, more diversified approach by buying exposure to it through index funds and exchange-traded funds (ETFs). These let you buy into hundreds or thousands of companies at once, which decreases your overall risk of losing money on your investment. You can buy index funds and ETFs very similarly to how you can buy individual stocks.
NVIDIA is easy to find in many index funds and ETFs as it’s part of both the S&P 500 and the Nasdaq 100, two major indexes frequently replicated with funds. NVIDIA is 1.5% of most S&P 500 funds and 3.6% of most Nasdaq 100 funds.