Shares of Tesla (TSLA) continued to fall, falling 13% on Jan. 3, a day after the electric car company reported vehicle production and deliveries for the fourth quarter of 2022.
In the final three months of 2022, Tesla sold just 405,000 vehicles, missing Wall Street analysts’ estimates of 420,000.
But despite the sharp drop, Tesla’s stock price has risen sharply since it went public.
In 2010, when Tesla went public, the stock price per share was $17, and in November 2021 it reached an all-time high of more than $400 per share. With a current market capitalization of more than $300 billion, Tesla is widely regarded as one of the most valuable auto companies in the world.
The current value of a $1,000 investment five years ago
For shareholders who invested in Tesla stock early, the short-term share price decline will not erase their long-term gains.
On January 2, 2018, Tesla stock was trading at $21.37 per share. As of January 3, 2023, each share is trading at $108.10, a whopping 405% gain. So, a $1,000 investment in Tesla five years ago is now worth $4,973, a whopping $3,973 profit.
Even if you didn’t invest five years ago, but chose to take advantage of the epidemic stimulus subsidy or defer student loan repayments, investing at the stock price of $46.75 on May 1, 2020, this investment has now increased by 80%, and the total value of $2,270.
There is no guarantee that you can time the market and invest in a stock at the right time to make a fortune. The stock market is always unpredictable, and you can’t predict how the stocks you invest in will react to world events, natural disasters or economic downturns. A stock’s past performance is not always predictive of its future ups and downs.
In fact, thanks to the existence of compound interest, the longer you invest, the more time your money has to rise and create benefits for you.
What factors to consider before investing in a company
If you’re considering investing in Tesla, or any other stock you like, there are a number of things you should first consider.
1. The scale of investment should not exceed the amount you can safely accept. Determining how much you can invest ultimately depends on how much money you can comfortably accept in the stock market and how much you can afford to lose if something goes wrong. A basic principle suggested by experts is that the amount of investment should be between 15% and 25% of after-tax income. Of course, the exact ratios vary from person to person, and you should reevaluate periodically to determine if the strategy is right for you and adjust as your financial circumstances change. Paul Peeler, a financial advisor at Integrated Financial Group, said: “The proportion of funds invested in the stock market depends on how long you need to use the funds and your tolerance for stock price fluctuations. The longer the period, the higher the tolerance. , the proportion of funds invested in the stock market can be higher. And vice versa.”
2. Don’t try to predict future returns based on past performance. Just because an investment is or has been doing well doesn’t mean you’re going to make a lot of money in the future. When choosing an investment target, research should be conducted to study the company’s historical stock price fluctuations, income and forecast, but remember that when determining the investment target and investment amount, it must be based on your own risk tolerance, time frame and investment goals.
3. Don’t invest all your money in one company’s stock. You can invest in multiple younger companies in various ways instead of investing all your money in just one company. “Globally diversified index fund portfolios default to holding some new companies, so by that standard, investors should own some younger companies,” Peeler said. The vast majority of it is linked to the direct shareholding in the new company.” (Fortune Chinese Website)
Translator: Liu Jinlong
Reviewer: Wang Hao
Tesla stocks have continued to fall, declining 13% on January 3, a day after the electric auto maker reported vehicle production and delivery numbers for the fourth-quarter of 2022.
The company sold just 405,000 cars during the final three months of 2022, falling short of Wall Street analysts’ estimate of 420,000.
Still, even with such significant losses, Tesla has seen tremendous growth since its inception.
The company first went public in 2010 at $17 per share and hit just over $400 per share at its all-time high in November, 2021. Worth well over $300 billion, Tesla is recognized as one of the most valuable car companies in the world.
How much you’d have if you’d invested $1,000 five years ago
For shareholders who got in on Tesla stock early, these short-term declines don’t erase their long-term gains.
On January 2, 2018, one share of Tesla was trading at $21.37. As of January 3, 2023, one share was trading at $108.10, which is a 405% increase. So if you’d invested $1,000 five years ago, you’d have $4,973 today, which is a $3,973 profit.
Even if you hadn’t invested five years ago and instead you opted to use your stimulus check or sponsored student loan payment to invest on May 1, 2020 when share prices hit $46.75, your investment would be up by almost 80% for a total value of $2,270.
Timing the market and trying to get in on a certain stock at the right time isn’t guaranteed to lead to a major fortune. The stock market is wildly unpredictable and there’s no telling how your investments will respond to world events, natural disasters, or Economic downturns. Past performance isn’t always indicative of how a certain stock will increase or decrease over time.
What is true is that the longer you’re invested, the more time your money has to grow and work for you thanks to the magic of compound interest.
What to consider before investing in a certain company
If you’re considering investing in Tesla or another company you’re passionate about getting behind there are a few considerations you should make.
1. Never invest more than you’re comfortable with. Knowing how much to invest will ultimately depend on how much you’re comfortable tying up in the market and how much you’re okay with losing if things don’t work out in your favor. As a general rule, experts suggest investing between 15% to 25% of your after-tax income. Of course, this will vary from person to person and you should make it a point to reevaluate periodically to make sure this strategy still works for you and adjust if your financial circumstances have changed. “The percentage of that going into stocks is determined by the length of time before the money is needed and tolerance for volatility,” says Paul Peeler, financial advisor at Integrated Financial Group. “The longer the time frame and the higher the tolerance, a higher percentage can go into stocks. And vice-versa.”
2. Don’t try to use past performance to dictate future earnings. Just because an investment is doing well or has done well in the past doesn’t mean that you stand to win big in the future. When choosing a stock to invest in , you should do your research and look into a company’s price history, revenue, and projections, but keep in mind that your decision about what to invest in and how much should be based on your risk tolerance, time horizon, and investment goals.
3. You don’t have to tie all of your money up in one company’s stock. There are ways to gain exposure to investments in a number of younger companies without putting all of your money behind a certain one. “A globally diversified portfolio of Index funds will own some young companies by default, so by that criteria everyone should own some younger companies,” says Peeler. “But very few people should have a substantial portion of their investment mix tied up in direct shares of young companies.”
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