Even if the name of this company is somewhat unfamiliar, chances are you’ve used NVIDIA products on a gaming console or personal computer. Today, NVIDIA dominates the graphics processing components market and in the future its products may be the backbone of artificial intelligence (AI) computing applications such as self-driving cars.
That exciting potential has prompted NVIDIA’s strong performance: In 2021, its third-quarter earnings grew 50% year-over-year and its stock price rose nearly 127% year-over-year. Forward-thinking investors may want to include this sophisticated 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
If you don’t already have one, the first step to buying any stock is to open a brokerage account. (If you do, you can get to step 2.)
You want a brokerage account with no business charges and low account minimums. To get a good start on what might work best for you, check out Forbes Advisors’ list of best brokerages and investment apps.
When you decide on a brokerage, you should also consider your investment goals. Do you aim to save for retirement? In that case, go with the Registered Retirement Savings Plan (RRSP) because it is a tax-deferred savings account and you will not have to pay taxes on any investment as long as it remains within the account. If the amount is withdrawn, they will be treated as income and should be reported on your income tax.
If you are investing for short-term goals, you should probably go with a tax brokerage account. Even if you do not receive the tax benefits of RRSP, you will be able to deposit as much money as you want and do not have to be content with RRSP’s annual limits, you can take advantage of this tax-loss harvest.
2. Calculate how much you can invest
There are chances that you will not be able to access all of them in NVDA. But you may not be sure what is the right amount to invest in it. Ask yourself the following questions: How much NVIDIA can you buy?
- What is your budget? Your investment 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 to invest in personal stocks before covering those grounds, you may find yourself in a difficult financial situation if the money you invest is unexpectedly needed.
- What is the current price of NVDA? Although stock prices have been fluctuating over time, it is good to note the current price of the stock and where it is recently because you can tell how much you can buy. NVIDIA stock cost $ 168.12 ($ 130 USD) per share and $ 426.71 ($ 330 USD) per share for the 2021 calendar year. It is important to keep in mind because not all brokerages will allow you to buy partial shares or parts of a complete stock, and you will have to deal with a very expensive investment when you have to buy entire shares. Canadians are limited in their options for stocks because they are only offered by Wealth Simple and Interactive Brokers.
- What is your investment strategy? Do you make a big purchase, or do you buy small pieces consistently over time? If you do not already have enough money to invest, you may prefer the latter method known as the dollar-cost averaging. By buying the same dollar amount of stock at regular intervals, you can pay less per share in the long run, regardless of the stock price at the time of purchase. You reduce your risk of buying a lot when prices are high and very low when they are low.
- What about your other investments? Presumably NVIDIA will not be your only investment. So how does it complement your other investments? Is this one of the many large-cap technology stocks in your portfolio, or does it represent your full exposure in that market? Ensuring that you have a diverse portfolio that includes many 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 basic and current economic 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 American companies to submit Form 10-K annual reports and Form 10-Q quarterly reports. You can find this information on its investor relations site and the SEC’s database.
It is helpful for new Canadian investors to turn to resources such as Globe Investor or their brokerage’s research offerings for expert analysis on NVIDIA’s quarterly and annual reports. This will help you understand how the company’s finances are better over time.
4. Place your order
To purchase NVIDIA, log into your brokerage account or investment application and complete the order form. You need to enter the company’s ticker symbol, NVDA, as well as the amount or dollar value of the shares you want.
You may have the option of specifying the order type. The most common are market orders and limit orders.
With a market order, you request to buy at the best current price of the stock. This means you can expect an immediate sale, but there is no guarantee for a specific price. If you have no choice in how you make your purchase, this is probably a market order by default.
Meanwhile, if you want to make sure you only buy NVDA at a certain price, you can choose to call it a limit order. This allows you to set a firm amount on the amount you want to spend, and if the price of the stock rises above it, your order will not pass.
Trading on the NVIDIA Nasdaq exchange, you can purchase it from Monday to Friday from 9:30 am to 4:00 pm ET. You may have access to pre- and post-market hours through your brokerage.
5. Be aware of currency conversion fees
If you trade American stock from Canada, your brokerage will maintain records but you will be subject to currency conversion fees on the current exchange rate. These fees apply when purchasing and selling your US stock and range from 1% to 4%.
They can be avoided though. You can reserve your money for US stocks within a US dollar bank account, so you never have to convert the money from Canadian to American dollars, or you can manage Norbert’s Gambit if you list both Canadian and US stock. American Stock Exchanges.
What is Norbert Gambit?
When you buy a stock or ETF it is an interlist on American and Canadian stock exchanges. You buy Canadian shares of that stock or ETF, then you 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 NVIDIA or The result of buying an ETF.
6. Keep the tax implications in mind
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.
7. Evaluate the performance of NVIDIA
Investing is not the same thing. Even after you buy your NVIDIA stock, it is important to periodically review the performance of your stock so you can determine if it still meets the goals you have set.
Start by looking at how much NVIDIA prices have increased over the past year to compare to other assets in your portfolio, other technology stocks (who you own or others are doing well), and benchmarks such as the Nasdaq Composite Index or the S&P 500. When you decide to buy NVDA you may want to reconsider the financial information you saw and track how it has changed over time.
How to Sell NVIDIA Stock
Chances are you will not keep your NVDA permanently. Even long-term investors will eventually sell their holdings.
To sell your NVIDIA stock, you must log into your investment account, enter its ticker symbol and the amount you wish to sell, and complete the market or limit order.
Hopefully, you are selling at a profit, which means you may have to pay taxes. If you are selling from a taxable investment account and have seen large profits, you may want to talk to a tax professional to discuss the best ways to manage them.
Canadians are only required to make capital gains on American investments in Canada. They have to pay 50% of the investment value of their income tax. You do not need to pay capital gains to the IRS unless you own more than 5% of the American corporation, which is the principal asset of US real estate.
Other ways to invest in NVIDIA
The only way to benefit from its growth is to buy NVIDIA’s individual shares. You can take a safer, more diversified approach by buying exposure through index funds and exchange-traded funds (ETFs). These allow you to buy hundreds or even thousands of companies at once, which reduces your overall risk of losing money on your investment. You can buy index funds and ETFs just like how you can buy individual shares.
As part of both the S&P 500 and the Nasdaq 100, it is easy to find NVIDIA in many index funds and ETFs, with the 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.