Want to buy Nike stock? Here’s what you need to know

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You don’t have to be an athlete to wear Nike products – the company is well known. That, combined with a track record of strong performance, is enough to have many investors wondering how to buy Nike shares, which trade under the symbol NKE.

Ready to put your money where your feet are? Here are some things to consider before buying Nike stock.

1. Look for Nike stocks

Maybe you’ve been wearing Nike Air since you were a teenager or you wear Nike workout gear to the gym every day. You know the brand, but that doesn’t mean you know the company or the type of details you should evaluate before buying Nike stock.

Before you buy stocks, you should delve into company and industry fundamentals. This means researching Nike’s management team, revenue, net revenue, and profit, as well as expectations and anticipated challenges for the company and the sportswear industry as a whole. Consider not only what could go well for Nike in the months and years to come, but also what could go wrong and how it could affect the company’s stock price.

Even the most thorough research won’t predict the future of Nike – or any other company – but it will help you make an informed decision about whether the stock deserves a place in your portfolio. (To learn how to search for stocks.)

2. Ask yourself if Nike stocks fit your portfolio

Nike may be a household name, but that doesn’t mean its stock is right for everyone’s wallet. Investors’ current holdings, future goals and risk tolerance can all affect whether a stock purchase is appropriate for them.

When it comes to risk tolerance, it’s important to remember that individual stocks – even those of established growth companies like Nike – are generally riskier than diversified investments like index funds.

Why? Because index funds track a stock index and hold shares in many, often hundreds, of companies, rather than just one. Over time, the companies within an index fund that are successful will outweigh those that are not, making you less likely to lose your investment.

That’s not to say you can’t also choose individual companies to invest in, like Nike. But when you do, you can choose to limit your exposure to just one company. A popular rule is to limit individual stocks to 10% of your overall portfolio, reserving the rest for more diversified investments such as low-cost index funds.

3. Set a budget for Nike stocks

Whatever investment you choose, it’s normal, and even wise, to start small with one or two stocks; you can always increase your investment over time. As of this writing, Nike shares are selling for around $160 apiece. But there are other things to consider when considering how much you should invest in a company like Nike.

One of the most important things to consider is your time horizon. Generally speaking, investing money in the stock market is risky if you expect to need it in the next five years. This is true of stock funds as well as individual stocks such as Nike.

With a short time horizon, you are more likely to have to sell at a loss because you won’t have time to bounce back from market swings. But with longer time horizons, the long-term trajectory of the market can work in your favor.

Of course, not every company’s stock is destined to rise over time. Some companies will even go bankrupt, leaving their shares worthless. This may not be likely in the short term with a large company like Nike, but it’s still important to note that individual stocks can and do lose value, sometimes dramatically. You need to be sure you can weather these storms before investing in any business.

Disclosure: The author held no position in the above investments at the time of initial publication.

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