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Whether you believe in the future of electric vehicles (EVs) or just want to diversify your portfolio by investing in foreign companies, Chinese EV powerhouse Nio could be a good choice.
Founded in 2014, Nio is often referred to as the Tesla of China. As a result, the share price has skyrocketed since the U.S. IPO. Nio’s shares are up more than 700% over the past three years, from $1.56 in October 2019 to more than $12 at the time of writing.
If this kind of performance makes you want to give your portfolio a jolt, here’s what you need to know to buy Nio stock.
How to Buy Nio Stocks (NIO)
1. Research your investment options
Before buying Nio stock or any other stock, it is necessary to do your due diligence. That means studying the company to make sure you feel confident about its strategy and performance.
The company’s filings with the Securities and Exchange Commission (SEC), including annual and quarterly reports, are valuable sources of information. Nio also publishes these documents on its Investor Relations website.
You should also research analyst reports on Nio and other companies. Third-party companies like Morningstar often provide stock analysis, and Forbes Advisor experts provide insight and updates on company performance.
You can use publicly available information, expert advice, and your own judgment to make informed decisions about investing in Nio.
2. Choose an investment platform
If you don’t already have one, you’ll need an account on an investment platform to buy shares in NIO. A taxable investment account allows you to buy a wide range of assets beyond stocks, such as exchange-traded funds (ETFs) and mutual funds.
Broker accounts may have account minimums and other fees, so research your options carefully before deciding which account is right for you.
Brokerage accounts are available from online brokers, investment apps or even full service brokers. If you go for a full-service option, you’ll have access to a fuller range of services like estate and retirement planning, but you’ll likely pay the most fees. Online brokers and investment apps may also offer automated management.
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3. Choose the right type of investment account
Once you’ve identified the right investment platform, you need to open a brokerage account that allows you to buy and sell securities, including stocks and mutual funds. Depending on the platform you choose, you may also get access to research and educational tools, as well as multiple investment account options.
If you’re investing for retirement, open an Individual Retirement Account (IRA). But if you’re buying NIO for short- or medium-term goals, choosing a taxable brokerage account is your best option. Unlike IRAs, which have restrictions on when you can withdraw funds from the account, taxable brokerage accounts have no age restrictions or early withdrawal penalties.
4. Think about how much you should invest in NIO
For investors looking to capitalize on the booming EV market, Nio could look like a steal. Tesla, one of the biggest names in electric vehicles, was trading at more than $200 per share in October 2022. At around $12, Nio is a cheaper option, and even beginners can probably afford whole shares.
However, putting all of your money into one stock or one industry is not recommended. You want to build a diversified portfolio, so think about how Nio fits into your overall investment strategy.
Stock prices can fluctuate wildly, so only invest money you don’t need to cover short-term bills or essential expenses.
5. Place an order
Now that you have done your homework and know how much you want to invest, you can place your first order for Nio shares.
To buy shares, go to your brokerage account’s trading platform and enter the ticker symbol and the number of shares you wish to buy. Nio’s American Depository Shares (ADSs) trade on the New York Stock Exchange (NYSE) under the ticker symbol (NIO).
Brokers usually allow you to choose the type of order you want to place. A market order allows you to buy shares at the current price. With limit orders, your order will only be processed if the price of Nio reaches a certain point or below.
Stocks on the NYSE trade Monday through Friday, 9:30 a.m. to 4:00 p.m. EST. After hours trading is available through some online brokers, so you may be able to buy and sell Nio shares after the market has closed.
6. Monitor Nio’s performance
When buying stocks, it’s a good idea to review your portfolio and its performance. Looking at an annualized percentage return can help you compare a stock’s performance to your overall portfolio and the performance of competitors.
Industry benchmarks such as the S&P US & China Electric Vehicle Index can be helpful in analyzing Nio’s performance relative to the electric vehicle market.
How to sell NIO shares
Selling Nio stock is easy. Enter the brokerage account trading platform, enter the number of shares you wish to sell and decide whether to sell at the current price or set a target selling price in the future.
Keep in mind that if you sell for a profit, you will have to pay capital gains taxes. The tax rate can vary depending on how long you’ve owned the stock, so it might be a good idea to consult with a tax professional before making any changes to your portfolio.
How to invest in NIO with index funds
When deciding how to invest your money, diversification is the name of the game. The stock market can be volatile and investing in a number of industries and companies can help reduce your level of risk.
Index funds, which aim to track the performance of a benchmark index, can be an easy way to diversify your portfolio. Fortunately, about 80 exchange-traded funds (ETFs) hold NIO stocks. For example, you can invest in the Vanguard FTSE Emerging Markets ETF (VWO) or the KraneShares MSCI China Clean Technology Index ETF (KGRN) to gain instant exposure to Nio and other companies.