In a year of stock market ups and downs, Nike stock has shown relative strength: Though the stock’s price has softened since September highs, it is still up over 15% year-to-date.
That’s enough to earn Nike a place among the year’s best performers in the Dow Jones Industrial Average, and enough to have many investors wondering how to buy Nike stock.
The good news: Compared to other big-name growth stocks, Nike is fairly reasonably priced, currently hovering around $70 per share.
Ready to put your money where your feet are? Here are four steps to buy Nike stock.
1. Do your research
Maybe you’ve been wearing Nike Air since you were a teenager, or you wear Nike workout gear to the gym on the daily. You’re familiar with the brand, but that doesn’t mean you’re familiar with the company, or the kind of details you need to evaluate before buying Nike stock.
Consider not just what could go well for Nike in the coming months and years, but also what could go wrong and how that could affect the price of the company’s stock.
Before you buy any stock, you need to dig into the company and industry fundamentals. That means researching Nike’s management team, revenue, net income and earnings, as well as expectations and anticipated challenges for both the company and the athletic wear industry as a whole. Consider not just what could go well for Nike in the coming months and years, but also what could go wrong and how that could affect the price of the company’s stock.
» Don’t know where to start? Learn how to research stocks
Even the most in-depth research won’t predict the future of Nike — or any other company — but it will help you make an educated decision about whether the stock deserves a spot in your portfolio.
2. Set a budget for your investment
Individual stocks — even from established, growth companies like Nike — are riskier than diversified investments like index mutual funds.
Why? Because index funds track a market index and hold stock in many — often hundreds — of companies, rather than just one. Over time, companies within an index fund that do well will balance out those that don’t, which makes you less likely to lose your investment.
That’s not to say you can’t also pick and choose individual companies to invest in, like Nike. But when you do, we have two recommendations:
- Limit individual stocks to 10% of your overall portfolio. The rest should be made up of low-cost index funds for easy diversification.
- Don’t invest short-term money. Investing for retirement in 20 years? Great. Investing for a home you want to buy next year? Put the brakes on. As a general rule, you should never invest money you’ll need within the next five years. With a short time horizon, you’re more likely to have to sell at a loss because you won’t have time to bounce back from market fluctuations.
Following both of those general rules, set a budget for how much you want to invest in Nike. It’s OK, and even wise, to start small with one or two shares; you can always add to your investment over time.
3. Open a brokerage account
If you’re new to this game, you might not realize that you need a brokerage account to buy stock, including shares of Nike. If you don’t already have one, the process of opening one is quick and painless. (We have a step-by-step guide to brokerage accounts here.)
The biggest hurdle: Deciding where to house your account. There are a lot of able brokers competing for your money. To narrow down the options, consider trading commissions, account minimums, fees and investment selection. (Yes, you have your sights set on Nike. But that doesn’t mean you won’t want to diversify — or follow our guidance about padding your portfolio with index funds — later.)
If you need help, consult our list of the best brokers for stock trading. Once you’ve selected a broker, you can fund your account via electronic transfer from a bank or savings account.
4. Buy the stock
With your brokerage account up, running and funded, you can use the broker’s online trading platform to buy Nike’s stock.
To do that, search the broker’s website for NKE, which is Nike’s ticker symbol, or the code used to identify it on stock exchanges. (This is not the time for typos, so make sure you’ve entered it correctly.) Nike’s stock quote should show up, along with a buy button. Click that and an order ticket will load.
Within the order ticket, you’ll be able to specify how many shares you’d like to purchase and choose an order type.
Don’t get bogged down by the options for order type — for most people, it’s fine to focus on two:
- A market order tells the broker to purchase the Nike stock as soon as possible. The share price might vary from the price you see in your order ticket, because a market order prioritizes speed over price. The goal is to execute the order immediately.
- A limit order prioritizes price over speed: It tells your broker to place your order for Nike stock only if you can purchase the stock at or below a price you dictate. You’ll fill in the limit price as part of the trade ticket. A limit order protects you against wild swings in a stock’s price, but it also means the order may not get executed if your price isn’t met.
Your broker will notify you when your order goes through, at which point you’ll be a Nike shareholder. Even better: You can follow all of the above guidance to purchase stock in other companies, adding to and diversifying your portfolio. For more guidance, view our full guide on how to buy stock.