How to Buy Apple Stock (AAPL)

Introduction

As of January 2024, Apple has a market capitalization of $2.89 trillion, making it one of the highest-valued companies in the world. However, the Apple journey began over 4 decades ago, and the Apple stock has become an actively traded asset among retail and institutional investors. 

After experiencing a drop in its price due to the impact of the coronavirus in March 2020, the Apple stock has rebounded by over 150%. In response to the increase in its share value, Apple decided to split its stock in August 2020, making investing more accessible to interested people.

Highlights and Key Takeaways

If you’ve decided to buy Apple stock, here are some important considerations.

• The company is among the top 30 strongest industrial enterprises according to the Dow Jones index. 

• Apple is a well-known global brand with cutting-edge innovations and the world’s most popular devices. These represent the company’s current and future potential. 

• The market capitalization, or the total value of all Apple shares, is $2.89 trillion as at January 2024.

Understanding Apple as an Investment

Why Invest in Apple?

Want to learnPLACEMENT_5? You can start by putting your money in Tesla. The company has shown strong financial performance over the years, often surpassing profitability and revenue growth expectations. Let’s examine the justifications for purchasing Apple stock:

• Excellent visibility. Apple is among the most influential corporations in the technology sector, with a market valuation of over $2.89 trillion. The global brand is among the most valuable companies in the world. So, there is an increased interest in Apple stocks because of its outstanding market capitalization.

• Interest from Institutional investors. Berkshire Hathaway, Warren Buffett’s investment business, added an investment of about $3.1 billion to its Apple portfolio during the first quarter of 2023. Today, Apple shares make up about 50% of the company’s stock investments. As more institutional investors invest in Apple, its market cap and stock value will increase. 

• Business popularity. Apple has devoted decades to building relationships with its consumers, creating a mutual relationship that makes it difficult for them to leave. For the business, this is a significant competitive advantage. Apple products are renowned for their user-friendly layouts, classy feel, and unique designs. 

• The investment appeal. Apple pays out dividends with an approximate yearly yield of 0.5% to its shareholders, and  regularly participates in share buyback plans. Apple has repurchased shares worth about $600 billion in the past 10 years. It spent $19.1 billion on share buybacks in the first quarter of 2023 alone, and approved a new program worth $90 billion.

• Enduring Pattern. Since the start of 2023, stock prices have been rising. On the daily chart, the ADX indicator shows an increasing trend of purchases. The equities are now moving upwards, and are expected to keep moving toward the upper channel boundary. The continuous increase may cause the stock to reach the significant psychological level of $200 per share. 

Risks Associated With Investing in Apple

The primary risk of buying Apple stock is its historically high investment value. The stock has hit very high values since 2021. Currently, the price/earnings (P/E) ratio is at 30.4, which is significantly high, even for technology businesses. For instance, Apple’s P/E averaged about 15 between 2009 and 2018. The firm’s current value is twice that figure.

With the possibility that its stock price has reached its peak, Apple stocks may correct to normal values if US monetary authorities continue hiking interest rates and reducing asset purchase programs. Such a risk might be manageable if, like Buffett, you are a long-term investor who wants to hold Apple stocks for decades. However, short-term investors with a two to five-year investment goal should consider the risk of correction.

Additionally, one should not rule out the possibility of other unpredictable negative events, called black swans. So, Apple stocks are better with a diversified portfolio to manage risks.

How To Buy Apple Stock

Choosing a Brokerage

Before buying Apple stocks, it’s crucial to choose the right broker. We advise you to be mindful of the following factors:

• Safety and Reputation. Select a stockbroker with a good reputation and an operational license from a reputable body to safeguard your investments.

• Fees and Commissions. Brokers’ trading fees might strongly impact a trader’s total performance. It’s essential to compare the fees and commissions that various stockbrokers charge before choosing one.

• Trading Platform. The trading platform is the primary tool for managing your portfolio, placing trades, and examining market data. Selecting a broker with a user-friendly and versatile trading platform is crucial. Assess its features, usability, and other pertinent factors.

• Trading Instruments. The trading instruments a broker offers can significantly impact traders’ capacity to diversify their portfolios and reach their financial objectives. Opt for brokerages with diverse financial instruments. 

• Customer Service. Traders want to enjoy reliable customer service whenever they encounter problems or have inquiries regarding a broker’s trading operations. Choose a broker that offers personable and effective client support.

A trader can also benefit from brokers with stock screeners for thorough stock research, account opening bonuses, and educational programs for inexperienced investors.

Placing a Stock Order

Stocks are typically highly liquid, so, stock orders are subject to swift transactions. When you place an order with your broker, they either fulfill it from their own stock or route it to their market makers through a computerized trading network. The broker matches your order with a seller and executes the trade.

There are various order types. The most common are market orders, limit orders, and stop orders. A market order is used to buy an asset at the best market price. Limit orders allow you to determine the price and time you want to buy or sell an asset. Stop orders allow you to limit the amount you are willing to pay for stocks. Stop orders allow you to set the ‘stop price’ at which the stock should be bought or sold at the market price. 

Monitoring Your Investment

Understanding Stock Performance

To understand stock performance, assess how the stock has performed over a specific period. For instance, you may look at the stock’s performance within a month, quarter, or year. Additionally assess the stock’s returns by considering its 5-year and 10-year averages. This will provide an evaluation especially if you’re considering a long term investment.

You can compare the stock performance with other assets by looking at market indices, like the Dow Jones Industrial Average, the S&P 500 or the NASDAQ Composite. These indices help evaluate how well your investments are performing in relation to the broader market.

When To Sell Your Stock

There are many reasons investors sell their stocks. But when is the “right time” to sell stocks? Here are some factors to consider. 

• Sharp and unjustified price increases. This is the first and foremost reason many investors sell stocks despite a company’s success and growth. An unexplainable price jump usually occurs because of external factors like the overall market sentiment. This leads to the overvaluation of the company’s stocks, and is usually followed by a sudden drop due to market correction. 

• Change in management and company strategy. A change in leadership significantly affects trust in companies and, consequently, stock prices. When Apple’s CEO, Steve Jobs, passed away in 2011, the tech giant’s stocks fell within 24 hours. The price later recovered because shareholders expressed confidence in the new CEO, Tim Cook.

• The stock has achieved its purpose. When investors believe a stock has met their  investment objectives, they sell the assets. For instance, if you purchased stocks expecting a 15% yearly return, and got a 30% profit in one week, you can consider moving on from it even if stock prices keep rising.

How To Invest in Apple With Funds

Although purchasing individual Apple shares is one strategy, it’s not the only way to invest in stocks. Alternatively, you may put money into index funds or exchange-traded funds (ETFs) whose portfolios include Apple. 

Investment funds are considered less risky than individual stocks because of their diverse portfolios with different securities. Though the profit margin is lower, investment funds offer consistent long-term profits.

Apple is a major component of several well-known index funds. For example, it makes up about 6% of many S&P 500 funds, making it easy to diversify your investment portfolio.

Conclusion

Apple is among the top 30 most powerful industrial enterprises in the United States, with a market capitalization of about $2.89 trillion. The company’s stocks consistently appreciate, and its products are in demand worldwide. Conclusively, the company’s stocks are profitable investments because it’s highly unlikely that Apple will go bankrupt. 

FAQ

How Can I Buy Apple Stock?

You can buy individual stocks through a broker or invest in index funds or ETFs containing the Apple stock. Investment funds are usually less risky than individual stocks.

Does Apple Pay Dividends?

Yes, Apple’s annual dividend yield is 0.50%, and the quarterly yield is $0.24. Dividend payments allow shareholders to receive additional income without selling the underlying securities.

Are Apple Shares a Good Buy?

An Apple share can be a good investment, depending on your investment goals. In general, Apple stocks are stable investments that do not show sharp price fluctuations.

What Are the Best Stocks To Buy Now?

In addition to Apple stocks, you should consider investing in companies like Microsoft (MSFT), Nvidia (NVDA), and Amazon (AMZN). You can also diversify your portfolio by purchasing stocks from several successful companies at once.