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How to get a piece of Tesla, now that it's in the S&P 500

Ethan Rotberg
·3 min read
How to get a piece of Tesla, now that it's in the S&P 500
How to get a piece of Tesla, now that it's in the S&P 500

Buying a Tesla might still be a stretch for the average Joe, but in some ways it’s easier than ever to buy a piece of Elon Musk's iconic company.

The electric car maker made its S&P 500 debut on Monday, joining a diverse group of powerful businesses that make up America's benchmark stock index.

What does this mean for you as an investor? Well, you now have a few more options if you want to hitch your wagon to Tesla’s ascent.

What does Tesla joining the S&P 500 mean?

Wall street sign in New York with New York Stock Exchange background
Stuart Monk / Shutterstock

The Standard & Poor's 500 Index tracks the stock performance of 500 of the largest companies in the United States. Tesla finally made the cut after a truly remarkable year.

The manufacturer enjoyed five consecutive profitable quarters, alongside increasing demand for electric vehicles, and its share price jumped more than 730% in 2020.

By this past weekend, Tesla stocks had reached an all-time high of $695 a share.

Its inclusion in the S&P 500 gives the often volatile Tesla stock a shot of credibility, as the index is considered a key benchmark for the U.S. economy.

And Tesla didn’t just sneak into the bottom of the list; the company opened with a 1.69% weighting in the index. The only companies with a larger weight? Apple, Microsoft, Amazon and Facebook. How’s that for impressive company?

How to easily invest in Tesla

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Abu hasim.A / Shutterstock

So, who has an extra $700 laying around during this rollercoaster of a year? Don’t worry, there are several ways to invest in Tesla without buying a full share of your own.

Some investing apps allow their users to buy tiny pieces of large companies like Tesla. These “fractional shares” allow you to invest with as little as $1.

Don’t want to put all your eggs in Elon Musk’s mechanized basket? Now that it’s part of the S&P 500, you can easily invest in the company as part of a diversified portfolio.

How to invest in the S&P 500

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panitanphoto / Shutterstock

So, you want to invest in the league of heavyweights that Tesla just joined. Rather than purchasing hundreds of individual stocks, you can just invest in a single index fund or ETF tied to the S&P 500.

These funds contain slices of all 500 companies and try to mimic the performance of the overall index. Just note that not all funds have finished acquiring their Tesla stock yet.

You can even get a piece of Tesla with some spare change. One investing app will round up your debit or credit card purchases to the nearest dollar and invest the leftover pennies. Simply choose a portfolio that includes an ETF that mirrors the S&P 500 — and voila, you've got money in Tesla.

And if all of this sounds a bit intimidating, don’t be afraid to get some expert advice before you hit the stock market. An online certified financial planner can help create a personalized plan that makes sense to you.