Perhaps best known for its traditional sneakers, Nike is a manufacturing powerhouse that produces every kind of athletic equipment and apparel you could ever dream of. That led to impressive finances: for fiscal year 2021, Nike’s revenue was up 19% to $ 57.3 billion ($ 44.5 billion USD).
Shareholders are also at the end of its financial success. During the 20-year period of January 2001 and January 2021, Nike’s stock price rose nearly 2,000% – $ 8.73 ($ 6.77 USD) to $ 180 ($ 140 USD) per share. Short-term investors have also started riding Swoosh’s ascent. From the beginning of January 2019 to the end of January 2022, the price of Nike has increased by more than 80%.
If all of this motivates you to apply Nike’s “Do It” slogan to your investment, here’s how to buy Nike stock.
How To Buy Nike (NKE) Stock
1. Select the brokerage
To buy Nike stock, you need a brokerage account. If you don’t already have one, you should ideally open one in an organization that doesn’t have business fees and low investment minimums. To speed up your search process, check out our list of the best online brokers and best investment apps.
You also want to consider your financial goals. If you are aiming to invest for retirement, choose Registered Retirement Savings (RRSP). These types of accounts are tax-deferred for retirement savings because you will not be taxed until you withdraw the money, at age 71, when you begin receiving payments from the RRSP, it must be converted to a Registered Retirement Income Fund (RRIF). ), Or if you took money before that age.
If you are investing in more proximate goals or just want flexibility when pulling out your income, you should probably choose a tax account. You do not receive the tax benefits of RRSP, but you can take advantage when you want without the penalty or limit on how much you can invest each year. You can engage in tax-loss harvesting, which allows you to sell investments at a loss to offset the other tax benefits you make in a year.
2. Decide how much you can invest
When deciding how much to invest in Nike, ask yourself these four questions:
- What is your budget? You don’t want to invest the money you need for your regular expenses or an emergency fund. You want to make sure you are at least earning something for retirement before you start investing in other types. Once you have an account, you can go for any additional investments you choose, including Nike.
- What is the current price of NKE? Nike’s share price may be more than a pair of Jordan. If you don’t have much to sink into NKE at once, you may want to look for brokerages that allow you to invest in partial equity investments so you can buy stocks instead of whole stocks. This feature is only available in two Canadian brokerages. Only Interactive Brokers and Wealthsimple allow you to trade partial shares of stocks.
- What is your investment strategy? There are two main ways that people invest: big one-off investments and regular, small investments. The latter method, known as the dollar-cost average, can reduce the average price you pay per share in the long run. By buying a fixed dollar amount of investment, you avoid buying a lot when the price of the stock is too high, regardless of how the market is performing. Because it has a lower financial barrier to entry, it can help you get your money on the market as soon as possible, rather than forcing you to wait until you build a large amount.
- How does Nike fit into your overall portfolio? “I consider NKE a ‘core holding’,” says Nathaniel Hoskin, a certified financial planner (CFP) and founder of Hoskin Capital. “The major holdings of the portfolio are very large capitalization and well-known companies.” This means they experience lower price changes and are less risky than smaller, less established companies. However, you still want a diverse mix of different types of companies to help you grow your money while reducing your risk over time. This means that NKE should not be the beginning and end of your portfolio.
4. Financing of Research NKE
Before you buy any stock, you should do your own research on its financial and historical performance. This way you are fully aware of its business operations, growth plans and financial stability.
As a publicly traded American company, the US Securities and Exchange Commission (SEC) requires Nike to submit annual and quarterly statements. You can view it on Nike’s Investor Relations page or SEC.gov. You can supplement these reports with the analysts’ reports and insights you find using your brokerage’s research resources.
An important note: when you are researching Nike, you may find that it has two share classes – Class A and B. You only have to worry about Class B, because A’s don’t trade in the public market and are primarily run by Nike’s founding family.
An important distinction between Class A and B is that Class A shares can be converted into Class B shares in a one-to-one ratio (the reverse is not true) and Class A shares are eligible to elect nine of the 12 members. Nike board. Class B shares select the other three, meaning that Class A shareholders effectively control the company.
5. Order for NKE stock
When you’re ready to buy Nike stock, you simply need to log into your brokerage account, enter Nike’s ticker symbol (NKE), and enter the amount (or dollar value of the shares) you want.
Depending on your preference and the brokerage interface, you may need to choose between order types. Market orders are completed immediately at current trading prices and are usually the default if no alternative is selected. Limit orders, meanwhile, refrain from executing your purchase until a certain price is met. This is a helpful feature for people who expect the value of a share to decline soon.
Since it trades on the New York Stock Exchange (NYSE), you can buy and sell Nike shares from Monday to Friday from 9:30 am to 4:00 pm ET, though you can offer extended hours before or after your brokerage market closes.
6. Keep track of currency conversion fees
When you trade US stock from Canada, you are subject to currency conversion fees when you buy and sell. These fees are above the currency exchange rate and can range from 1% to 4%. When they buy US stock, they convert Canadian dollars into American dollars and sell them back to Canadian dollars at the time of sale.
Fortunately, there are ways to avoid these fees. The first way is to reserve your US dollars to buy American stocks in a US dollar bank account in a Canadian bank, so you never have to convert your money when you trade those stocks in the first place.
Another way to avoid conversion fees is by operating Norbert’s Gambit.
Norbert’s Gambit is when you buy an interlisted stock or ETF on American and Canadian stock exchanges. You buy Canadian shares of that stock or ETF, then ask your brokerage to “journal over” your Canadian shares and convert them into American shares of the same stock, then you can sell your American shares in US currency and use US dollars without converting to any American stock like Nike or The result of buying an ETF.
If you are selling American stock, you reverse. Although you may have to pay a commission fee to the brokerage to handle Norbert’s gambit, the cost is much cheaper than the conversion fee. However, implementing Norbert’s Gambit is usually only worth it if you have more than $ 500 in US stock, otherwise just pay the fee.
7. Be aware of tax consequences
If the US stock you buy is paying dividends, you are subject to the IRS with a 15% withholding tax. Canadians actually get a break on this (other countries have a 30% withholding tax) Canada has a tax treaty with the US
The only other scenario where you have to pay taxes to the IRS as a Canadian for investment is if you make more than $ 5 million USD from your US-based investments. In this case, your estate pays the estate tax when you die.
8. Sell your Nike stock
Even long-term investors will eventually need to sell their investments. When you decide to split up with NKE, the process is as simple as your original purchase order.
Log into your investment platform, enter Nike’s ticker symbol and the dollar or share amount you want to sell. You can also choose a specific order type if you prefer not to sell at the current market price.
If you are making a substantial return, it is worth visiting a tax professional to evaluate the best way to reduce the amount of capital gains tax you have to pay.
As a Canadian, you owe the capital gains on your investment to CRA (50% of cumulative value) unless the American corporation, which invests more than 5%, owns US-based real estate as its primary asset. In that case, you also pay capital gains to the IRS.
How to Invest in Nike with Mutual Funds and ETFs
Nike is a leading company with decades of proven revenue and stock growth. But investing in any one company is risky.
To reduce that risk, experts recommend that you invest in multiple companies — or avoid picking and choosing yourself — and buy shares of index funds or exchange-traded funds (ETFs). Because they own hundreds of shares of company, you are basically buying shares of an already diversified investment portfolio.
“My advice is to start with an index,” says Hoskin. “This way, you don’t want to fill your portfolio with too many stocks immediately, and you don’t start with just one or two stocks. After investing your portfolio in an index fund, you can slowly begin the process of researching a couple of holdings.
Nike is recognized by many major index funds and ETFs. S&P 500 funds, for example, invest about 0.5% of their holding in NKE.
But if you still want to invest in an index fund with more Nike representation, you can consider the Index fund of the consumer discretionary sector, iShares S&P Global Consumer Discretionary Index ETF by BlackRock (Canadian-Hedge), which is listed on TSX. NKE is one of its top 10 major holdings.