Facebook is one of the veterans of social media. The company, founded in 2004, made uploading pictures and sharing thoughts online into a thing.
Billions of monthly users later, the tech company has seen exponential growth and become a household name in the tech space — so much so that it’s gone from trading at $38 per share when it made its initial public offering in 2012, to now trading at more than $100.
For these reasons and others, Facebook — which has rebranded as Meta Platforms — is a hot stock for many investors. Here are things to consider before investing, and how you can go about buying Facebook stock.
1. Do some basic stock analysis
Analyzing a stock might seem like a heavy lift, but it’s one of the first things to consider doing before buying Facebook or any stock. That means looking at its earnings reports, competitors and how the tech sector is performing as a whole. You might also look at what professional analysts are saying and read guides on how to research stocks. If you already have a brokerage account, your broker probably has stock screeners and other research tools available for you to use.
2. Think about how Facebook aligns with your investing goals
A big consideration of any investment decision should be your long-term financial goals. If your goal is to invest for the long term, buying Facebook stock may fit into that plan. However, if you want to create a balanced portfolio and you only happen to have tech stocks, maybe you don’t need to add another. Also, note that it may take time for you to see significant gains on your initial investment.
To mitigate risk, it’s good practice to keep your portfolio diverse. That means limiting individual stocks to 5%-10% of your investments. If a diverse portfolio is your goal, that could look like buying a few Facebook stocks and balancing your portfolio out by adding exchange traded funds, index funds and bonds.
3. Open a brokerage account
Opening an online brokerage account is a necessity if you want to buy stocks. It’s a pretty straightforward process that takes about 15 minutes. The only thing that may require legwork is doing your due diligence to find a broker with the lowest fees.
4. Pick your number
We aren’t referring to lucky numbers for a lottery ticket here — decide a comfortable number for you in terms of how much you want to invest in Facebook stock. Look at factors such as your monthly budget, whether you have enough in your emergency fund, how much risk you’re comfortable with and your financial goals.
When you’re ready to buy shares through your online brokerage account, you’ll have to select whether you want to buy a limit order or a market order.
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Market orders: Market orders mean you want to buy the stock ASAP, but the price could go up or down before the transaction goes through.
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Limit orders: Limit orders mean you’re buying the stock at a specific price and not going a cent over or under. If you can’t get the stock at that price, the order doesn’t go through and you aren’t charged anything.
Disclosure: The author held no positions in the aforementioned investments at the original time of publication.
This post was originally published on Nerd Wallet
