Do you believe 2020 is the year the electric car will finally go from a niche offering to a mainstream option that makes up a sizable share of consumer auto sales?
If you do, you have more options than ever before for companies to invest in. In fact, while there were once very few automakers offering EVs that married both style and function, new players keep entering the game -- many of which have the potential to be game-changers both for the electric vehicle market and for investors hoping to ride the EV wave to double-digit gains.
Such a wealth of choices when it comes to electric vehicle stocks may have you stumped about whether to put your money in Tesla (NASDAQ:TSLA) due to its stellar earnings, the strong competitive advantage its first-mover status afforded, and its expansion plans -- or whether to invest with newer upstarts such as Nikola (NASDAQ:NKLA) or NIO (NYSE:NIO), hoping they'll replicate Tesla's meteoric rise.
Of course, you could buy all three and profit if Tesla continues to grow at a rapid clip, if Nikola revolutionizes what a truck looks like, and if NIO takes the Chinese market by storm.
And if you're thinking this is out of your price range, given the total price tag of more than $1,502 for a single share of all three (with Tesla accounting for the bulk of your costs), I've got some good news for you: With $100, you can buy them all.
Fractional shares mean you don't have to choose between Tesla, Nikola, or NIO
Investors without a fortune to invest used to have tough choices to make. They could spend most or all of their available dollars on more established companies such as Tesla, which have proven track records but usually come with higher share prices. Or, they could gamble on newer and riskier companies like NIO or Nikola, which have much lower share prices and untapped growth potential, but haven't yet demonstrated ability to meet demand and achieve consistent profitability.
Fractional shares have changed the game though, and an increasing number of big-name brokerages now offer them.
With fractional shares, you don't have to buy a full share of any stock that interests you. When you purchase fractional shares, you won't place your order by indicating the number of shares you want to buy. Instead, you'll specify the dollar amount you'd like to invest into each company. You could split your $100 three ways and make a $33.33 bet on each, or bet big on Musk with a $90 investment in Tesla and throw a little cash to the upstarts. Or, if you're worried Tesla can't justify its lofty valuation, you could invest $45 each in NIO and Nikola, while reserving just $10 for Tesla in case it continues to prove the naysayers wrong.
With dollar-based investing (another term for buying fractional shares), you get more control over the ownership stake you're willing to take on. Every investor who purchases fractional shares makes the same percentage gains as any other investor, no matter how much or little stock they own. While the old rules of purchasing only full shares might lock you out of taking any ownership stake in companies with high stock prices, that's not the case anymore.
Since your investment choices aren't restricted by your ability to buy a full share, you can focus solely based on which companies you believe in. Plus, this approach gives you the ability to easily diversify by buying a smaller ownership stake in more businesses.
Which should you buy: Tesla, NIO, or Nikola?
There's no one right answer to whether you should buy Tesla, NIO, or Nikola. If you're worried that Nikola hasn't put a single truck on the road yet, or that NIO hasn't yet figured out how to make a diverse array of hit vehicles, you don't have to feel stuck with smaller, unproven options.
The right choice for you will depend on your risk tolerance, your belief in the strength of each company, and your individual investment goals. "A minimum amount needed to invest" is no longer on this list of considerations, thanks to fractional shares. You can buy an ownership stake in any one of these companies, or all three of them, even if the total amount of money you have available to invest right now is $100 -- or less.