Getting into the world of investing can be a bit scary, especially since you are dealing with your own hard-earned money! Even more, there’s a lot of language that isn’t clear, and knowing the right platforms to use can be overwhelming.
Still, the desire to invest in a company you see a future in is a great reason to start, even if you aren’t quite sure how yet.
Today, we are going to learn a little about investing, specifically how to invest in Nvidia, one of the most popular companies around right now. Let’s jump in!
What Does It Mean to Invest in Nvidia?
Investing is a rather abstract term, but there is mostly consensus when people talk about “investing” in a company from a financial perspective. When people talk about investing, they are referring to acquiring a stake in a company through the exchange of money.
For “public companies” (companies that are open for the public to acquire a stake in), acquiring a stake in a company means purchasing a portion of the company, which is represented in something known as a “stock.”
Each public company in the United States offers a certain amount of stocks (also known as “shares”), and owning shares is representative of owning a share of the company directly. If these shares are in high demand (because the company is doing well), they go up in price, giving shareholders a return on their initial investment.
Owning the stocks or shares of a company is a form of ownership of the company. For example, owning 5% of all the available shares in Nvidia means that you own 5% of the company. For Nvidia specifically, there are 2.49 billion total shares available, meaning that someone would need to own 24,900,000 shares to own 1% of the company!
Nvidia went public in 1999, meaning anyone is able to purchase shares in the company, essentially earning themselves a vested interest in the success of the company.
How to Invest in Nvidia
Investing in Nvidia is pretty easy in the regulated markets that exist today, especially since everything can be done online in a matter of minutes. There are two primary ways to invest in Nvidia, both of which we are going to cover.
Buying Shares Using a Brokerage Platform
The easiest and most direct way to invest in Nvidia is through the ownership of shares. These shares are issued by Nvidia as a form of fundraising, and allow investors a way to tie themselves to the success of the company.
In the United States, the exchange of shares on the public market is known as the “stock market,” of which there are two primary markets: the NYSE (New York Stock Exchange) and the NASDAQ. Both of these markets are highly regulated and monitored by the government, with all activity happening on the markets being open to the public eye. Investment into the stock market is one of the oldest ways to “invest” in a company and is generally what people refer to when they say they’ve “invested” in a company.
Nvidia is listed on the NASDAQ, one of the two major markets in the United States. In modern times, accessing this market is extremely easy and can be done online through a variety of platforms.
In order to purchase some shares in Nvidia, you will need something known as a “brokerage account,” which is simply a digital platform that allows you to interact with the market remotely and can hold those assets on your behalf (usually for a small transaction fee).
Some of the most popular brokerage platforms include:
- Fidelity Investments
- TD Ameritrade
- Merrill Edge
It’s important to know that these platforms have their own benefits and features, so doing your own research on which is best for you is extremely important. The easiest and cheapest platform to use is Robinhood, although executing more advanced investing strategies (like mutual and index funds) isn’t available on the platform.
If you are new to investing, however, and just want to play with a bit of money, simpler platforms like Robinhood are probably a good place to start.
Once you decide on the platform to use, simply download the app or sign in online, register with the platform, add some money, and then look up Nvidia. Currently, Nvidia is floating around the $165 range for a share, so purchasing a whole share would require at least that much. Some platforms do allow for “fractional” share transactions, meaning you can purchase only a slice of a share, if you desire.
Buying ETFs and Mutual Funds
Another way of investing in Nvidia is through the use of ETFs and mutual funds, which can be bought using the same brokerage accounts listed above, save for Robinhood. ETFs and mutual funds are a little more indirect than outright stock ownership, but they are also less risky.
ETFs and mutual funds are essentially large funds of pooled money with ownership of multiple bundled assets. For example, a mutual fund with a focus on “technology” may bundle assets like Apple, Microsoft, Nvidia, and Google together. Investors can then purchase shares of the ETF or mutual fund, gaining exposure (vested interest) to these companies without owning the individual companies themselves.
This is an extremely common way to invest in related companies since they are inherently less risky and more stable overall. For example, owning Nvidia stock after Nvidia announces bad news or a poor financial quarter would result in massive losses for individual investors, but in a mutual fund where Nvidia is only a portion of the overall pool, the individual news would be less catastrophic since the other companies may be reporting positive news. This less risky way of investing is quite common, although the potential upsides are generally smaller for the inverse reasons.
There are hundreds of mutual funds, ETFs, and index funds that incorporate Nvidia into their bundled investment pool, and you can check out some of the largest ones here.
Using a brokerage platform, you can purchase shares of these funds, giving you a roundabout investment into Nvidia. Mutual funds, ETFs, and index funds are a great way to have some exposure to Nvidia without taking on the full risk of that company alone.
Is Purchasing Nvidia Products a Method of Investing?
In common language, “investing” into a company is generally a reference to the purchase of stock, and therefore ownership, of a company. In a company such as Nvidia, there are consumer-facing products like GPUs (graphics cards) that are available for purchase.
Does buying the products of a company make you an investor? Well, there isn’t a real answer to this, but, by definition, no, it’s not the same thing as traditional investing. When you buy a GPU from Nvidia, you are getting an asset that will almost assuredly go down in value and isn’t really tied to the success of the company as a whole.
On the flip side, purchasing shares in Nvidia gives you direct ownership of the company and its potential upsides. If you are looking to invest in Nvidia, stocks or other market-based purchases are best for long-term growth as a solid investment, not the consumer-facing products a company offers, as those products usually do not appreciate in value.
Overall, investing in Nvidia is pretty easy, provided you have some cash on hand and have chosen a platform to use.
Direct stock ownership is the simplest and most direct way to invest in a company, although other roundabout ways like mutual funds and ETFs also exist. After purchasing either shares in the company or in a mutual fund that includes Nvidia, you now have a vested interest in that company, making you an investor!
Here are a few things to remember:
- Investing is a reference to stock ownership.
- It’s essential to use a brokerage platform in order to access the market where companies list their shares.
- Not all brokerage platforms offer the same things (for example, Robinhood does not offer mutual funds and ETFs).
- Buying Nvidia stock directly ties your investment to them directly, while a mutual fund or ETF is a less risky but more diluted way of investing in the company.
Enjoy your new ownership stake in Nvidia!
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