How To Buy Paypal Stock (PYPL)
PayPal Holdings Inc. (PYPL) is one of the biggest and most popular online payment platforms in the world. Founded in 1998, PYPL has grown to become a Fortune 500 company with 426 million active accounts.
PayPal has expanded its business to include cryptocurrency trading and buy now, pay later (BNPL) services. If you feel like the company is strongly positioned for more growth, here’s how to buy PayPal stock.
How to Buy PayPal Stock
1. Open an Investment Account
Before you can buy or sell shares of PayPal, you need to choose a broker and open an investment account.
Brokers act as intermediaries between you and the stock market, executing your trades. They range from low-fee online brokers that allow you to buy and sell stock on your own, to full-service brokers that are more expensive but provide professional investment management services.
Costs can vary by broker, so look for one that offers low fees and has a low account minimum so you can start investing right away.
Consider the type of brokerage account you’ll need:
- Individual retirement accounts (IRAs): IRAs allow you to save for retirement. Depending on the type of IRA and whether you have access to an employer-sponsored plan, your IRA contributions may be tax deductible.
- Taxable investment accounts: Taxable brokerage accounts lack the tax benefits of an IRA, but they offer more flexibility. There are no annual contribution limits, and you can withdraw money at any time without paying penalties.
Check out the best investment apps and online brokers to get started.
2. Decide How Much Money to Invest in PayPal
Once you’ve chosen a broker and opened an account, you should get a handle on how much money you want to invest in PayPal stock. When deciding on an investment budget, take into account these four factors:
- Your Overall Budget. How much of your budget is available to invest? The money you invest in stocks like Paypal should be separate from the cash you stash in savings for an emergency fund or shorter-term goals.
- Current Stock Price. As of late April 2022, PayPal’s stock price is over $84, so you’ll need to deposit at least that much in your new brokerage account. Some brokers allow you to buy fractional shares, which let you buy only a small portion of one share of PYPL.
- Your Overall Portfolio. How will PayPal fit into your overall investment portfolio? Experts recommend against investing only in one company or even one industry; instead, they recommend diversifying your portfolio by investing in many companies and industries. In fact, investing researchers found that investors need 30 to 100 stocks to have an appropriately diversified portfolio.
- Your Investing Strategy. Broadly speaking, you can buy PYPL using dollar cost averaging or a lump sum approach. The latter makes sense if you receive a sudden windfall or expect a stock’s price to increase in the short-term. Dollar cost averaging makes sense for investors that have more limited funds to invest at one time and want to reduce their risk over time.
3. Do Your Due Diligence on Paypal
Buying an individual stock like Paypal is a serious investment, and it’s not something you should rush into without doing research. Before placing orders for PayPal shares, review the company’s financial statements, annual reports and investor presentations. You can view those documents on its investor relations website.
By reading those documents, you can learn about the company’s business model, the threats facing it and its future outlook.
For example, payPal has expanded beyond an easy way to pay for purchases from online retailers. PayPal has a range of payment solutions, including peer-to-peer payments through Venmo and payment processing through Braintree. And, PayPal even allows customers to buy and sell cryptocurrency.
4. Place An Order for PYPL Stock
After you understand the fundamentals of Paypal’s business, you’re ready to place an order. Log on to your broker’s trading platform and type in PayPal’s ticker symbol—PYPL—and add the number of shares you want to purchase. For brokers that offer fractional shares, enter the dollar amount you want to invest.
Brokers usually allow you to select an order type. While there are many variations, the two most common are market and limit orders.
- Market Order. When you place a market order, the order is processed immediately at the current price.
- Limit Order. With a limit order, the order is only processed once the stock reaches a specific price or better.
5. Evaluate Your Investment
Whether you invest in just one stock like PayPal or hundreds of stocks, it’s wise to periodically check in on your investments and see how they measure up to the overall stock market.
Useful when evaluating your investment’s performance are stock market indices. A stock market index measures the performance of a particular segment of stocks, such as technology companies based in the U.S. or the largest companies listed on the stock exchange.
PayPal is traded on the Nasdaq stock exchange. To get an idea of how well PayPal is performing, you could compare it to the performance of the Nasdaq Composite Index, an index that includes more than 3,000 stocks traded on the Nasdaq exchange.
For example, the Nasdaq Composite Index grew by 53.54% over the past three years. During that same time period, PayPal’s stock price decreased 24.29%.
How to Sell PayPal Stock
If you decide to sell your shares, think about setting up a meeting with a tax professional first. If your investment has grown in value, you may incur capital gains taxes when you sell your shares, so a tax professional can help you come up with a plan on how to handle your investments and taxes.
To sell your shares, enter PayPal’s ticker symbol and the amount you want to sell in your broker’s trading platform. As with buying stocks, you can typically select a market order to sell shares right away, or you can designate a specific price.
Invest in PayPal Through Index Funds and ETFs
You know how to buy PayPal stock now, but is buying individual stocks best for you? If it seems too risky, consider investing in index funds or exchange-traded funds (ETFs) instead.
Index funds and ETFs are made up of hundreds or even thousands of stocks, so you can buy a single share of a fund and get instant diversification. By contrast, you’d have to buy many stocks — and manually monitor and rebalance your portfolio — if you invested in individual stocks on your own.
Hundreds of funds include PayPal as one of their holdings. One of the best known is the Invesco QQQ ETF, a fund that tracks the Nasdaq-100 index. PayPal makes up 0.81% of its allocation; top holdings include Apple, Microsoft and Amazon.