This article provides information and education for financiers. NerdWallet does not provide advisory or brokerage services, nor does it advise or advise investors to buy or offer particular stocks or securities.Many financiers want to take a bite out of Apple: It was the very first publicly traded U.S. company to be worth $1 trillion in value, and nearly two-thirds of Americans own at least one of its products.But a recent stock split might have made the stock much more attractive: Apple’s shares experienced a four-for-one split, bringing the cost of Apple stock below $499.23 at the close of Aug. 28, 2020, to $127.58 at the opening on Aug. 31. The split makes it less expensive for investors to buy Apple stock.( If you’re currently an Apple shareholder, don’t worry– stock splits don’t affect the worth of your holdings.)However whether Apple or any other stock should have area in your portfolio will depend upon your financial scenario, present holdings and investment goals.Here are three things to think about before purchasing Apple
stock:1. The principles of Apple stock You may have currently made it past what can be a frustrating part of investing– identifying
the stock you wish to purchase– however you’re not off the hook for another important step: research.Nerd idea: Apple’s stock sign is AAPL. The company’s IPO remained in December 1980, at$22 a share. Apple pays an annualized dividend of$ 3.08.
Knowing a company as a client does not equivalent knowing it as a financier. Wise financiers spend time doing both quantitative research study(looking at things
like profits, earnings and revenues )and qualitative research( evaluating the competitors, management and how the company earns money, for example ). If you are brand-new to such analysis, see our guide on how to research study stocks.As part of your research study, you can evaluate Apple’s annual and quarterly reports, which will outline essential info regarding the business’s operations, financial results, sources of income and expenditures. You can likewise look at elements like Apple’s price-to-earnings ratio(called a PE ratio)and its dividend yield and development rate, specifically if Apple’s dividend becomes part of why the stock attract you.Annual and quarterly reports are available through Apple’s investor relations site, and crucial info and stock research study is likewise available through online brokers or independent analysis websites like Morningstar.(Read our review of Morningstar’s stock research study offerings.) Get trusted investing insights Gain access to specialist chooses for mutual funds, stocks and ETFs with a 14-day free trial
* of Morningstar Premium. * Paid membership afterwards, see Morningstar.com for information.2. How Apple stock suits your portfolio If you like what your research discovers, you’ll wish to consider how Apple stock suits the rest of your financial investment
portfolio. Investing is all about diversification and asset
allocation, two terms that include spreading your money across different investments to align just how much risk you’re taking with your individual risk tolerance. Investing your whole portfolio in any single stock is considered dangerous; one run of misfortune for that company and your entire investment is at risk. Diversifying your investments throughout numerous business, markets and geographical areas can help in reducing that risk.So prior to you purchase Apple stock, consider what other financial investments you own and how Apple slides into that mix. Does purchasing Apple shift your portfolio too far toward technology? Too far into stocks in general?( Many rules of thumb recommend a portfolio should contain both stocks and much safer investments, like bonds.)Or does it balance out the other financial investments you own?Many financiers purchase Apple stock as part of an index fund, which is a collection of investments covered together. When you buy an index fund, you’re buying a group of financial investments developed to track a stock exchange index, like the S&P 500. Apple is consisted of in the S&P 500 and is a large-cap stock– which describes the business’s size, or market capitalization– so it is regularly among the top holdings of S&P 500 index funds and large-cap index funds.3. How much you can manage to invest With research-backed factors and portfolio analysis supporting your choice to buy Apple stock, it might be appealing to assume the quantity you need to buy is the quantity you could buy.Say you have $1,000 to invest. You can find out how many shares of Apple that would buy you by taking a look at real-time trading details, which is available on your online broker’s
site by searching for Apple’s trading ticker: AAPL.But buying as much Apple as you can pay for might not be the best decision, depending upon your financial situation and what else presently remains in your portfolio.
Consider: How the amount of your investment will affect the balance of your portfolio. Again, investors typically attempt to construct and keep a varied range of investments– not excessive in a single type of asset or business. A basic rule is not to have more than 10%of your overall portfolio in one stock.Your short-term objectives. While the stock market is considered a proven long-lasting investment, it is precisely that. There are other
alternatives for short-term cost savings when your objective is to maintain your principal instead of growing it. You should likewise think about whether you have enough cash set aside for an emergency situation. Financial experts frequently suggest having enough to cover three to six months of living expenses.Your future investment plan.
Dollar-cost averaging, a technique of making regular investments with time, helps guarantee you don’t put all your cash into the market when rates are high. You can always make future investments into Apple or any other stock in time; there’s no need to invest all of your readily available capital at once.See our basic guide on how to purchase stocks for additional details on making stock purchases, consisting of a complete breakdown of various order types.Disclosure: The author held no positions
in the previously mentioned securities at the time of publication.