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Buying into the excitement over electric vehicles can be easy if you're an environmentally conscious consumer. But many car companies are advertising their new green initiatives, making it hard to tell which one will be the EV front-runner.
All the noise can make it hard to know if Rivian Automotive Inc. (RIVN) will bolster your stock portfolio. So here's what to consider when thinking about buying Rivian stock and how to buy it.
1. Look at Rivian's stock fundamentals
With many car companies making eco-friendly promises left and right, and without too many actual electric vehicles on the road, it can be hard to know where the EV industry is headed.
To sift through the noise, it's worth doing your research. Look at competitors, car reviews for the emerging EV models, and company health indicators, such as debt and revenue. This information can help you make sound decisions.
For more tips, see our guide on how to research stocks.
2. Consider Rivian in the context of your existing portfolio
Your investment portfolio encompasses all of your assets. Think about your 401(k) and any investment accounts, such as a traditional or Roth IRA. What investments do you already have, and how would Rivian fit into the mix?
If you have an IRA chock-full of technology stocks, adding Rivian may overbalance that sector. On the other hand, it might be something to consider if you have a well-diversified portfolio and want to put a small amount of money into Rivian after reviewing the company's financial information.
It's also important to consider whether you can afford to lose the money you'd be putting into Rivian. For example, it may not be worth the risk if you think you will need that money in less than five years.
Risk itself is another factor. Rivian is a newer company with an unproven track record. How confident are you that Rivian will survive the early stages and rise to the top? Any investment you put into a single stock should be made with the knowledge that it is possible to lose your entire investment if the company goes out of business. A good guideline is to have no more than 5% to 10% of your portfolio in individual stocks.
» Dive deeper: Read more about EV stocks
3. Open a brokerage account
If you already have a brokerage account (think a traditional IRA, Roth IRA or standard brokerage account, but not a 401(k) or another employer-sponsored retirement account), you can skip ahead to No. 4.
If not, opening a brokerage account is easy. An investment or brokerage account is where you'll invest and hold your assets. The process takes about 15 minutes, and once your account is open and funded, you'll be ready to buy stocks, funds and other investments.
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4. Decide how much to invest in Rivian
If you've decided Rivian stock is for you, your budget will partially determine how much you invest. Since the stock debuted, its price has ranged from $172 to $20. Say the stock is currently worth $30 and you have $100. You could buy a few shares for $30 each, but if the stock jumps to $150, you couldn't buy any.
If budget isn't a concern for you, you'll need to decide how much of your cash you're willing to invest.
You'll also need to determine what type of order you'd like to use: a "market" or a "limit" order. A market order is when you tell the brokerage to buy the stock as soon as possible. As a result, the final price you pay might be slightly different than the price you see when you place the order. A limit order is when you tell the broker that you only want to buy the stock at a specific price. If the stock isn't available at the price you specify, your order won't go through.
» Ready to learn more? Check out our guide on how to buy stocks
Neither the author nor editor held positions in the aforementioned investments at the time of publication.