How to Invest in Tesla

US company Tesla is considered a pioneer in electric mobility solutions. Some investors see the US carmaker with its CEO Elon Musk as a sound investment opportunity. This guide answers the most important questions about how to invest in Tesla.

What do I need in order to invest in Tesla?

In Switzerland, investing in Tesla is relatively simple. All you need to do is either open a stock brokerage account at a Swiss bank or specialized online stock broker, or open an account with Swiss neobanks Yuh or Neon.

How much does buying Tesla stock cost in Switzerland?

When you buy shares in Tesla, you have to pay stock brokerage fees. On top of that, you also pay the Swiss stamp duty. You should also pay attention to possible custody fees.

How much you have to pay depends primarily on which bank you use. There are major differences between the custody fees charged by different Swiss banks for holding your shares. Brokerage fees also vary between banks (see Table 1). Swiss stamp duties are always the same no matter which Swiss bank you use.

Comparing Swiss stock brokerage accounts on moneyland.ch can save you money. Just use the US equities profile or create a custom profile using the individual profile option.

Table 1: The five cheapest Swiss banks for buying, holding, and selling Tesla stock worth 1000 US dollars

The comparison above is based on an investment in Tesla stock worth 1000 US dollars, and a custody account with securities worth 10,000 US dollars in total. Only licensed Swiss banks are included in the comparison. Date: January 15, 2024.

For smaller investment amounts of several hundred francs, neobanks like Yuh and Neon usually have the lowest brokerage fees, but are not necessarily the cheapest option if you take custody fees into account. For larger investments, banks that specialize in stock brokerage are cheaper.

Table 2: Brokerage fees from Swiss neobanks for buying Tesla stock worth 1000 US dollars

*You pay an additional currency conversion fee of 0.95 percent. The fees shown in Table 2 do not include Swiss stamp duties. The comparison is based on an investment in Tesla stock worth 1000 US dollars and a custody account with securities worth 10,000 US dollars in total. Date: November 23, 2023.

Which ETFs can I use to invest in Tesla?

Tesla’s stock is included in numerous exchange-traded funds (ETFs). These index funds are traded on stock exchanges, and make it possible to invest in a whole portfolio of stocks even with just a relatively small amount of investment capital. The fees are typically lower than those of actively-managed funds.

Table 3: The ETFs with the largest Tesla stock components

Source: Justetf.com. Date: November 20, 2023.

So the advantage of investing in Tesla indirectly using ETFs is that your money is spread out over other stocks as well, which lowers the risk of loss. But it is important to be aware that many ETFs invest in just one industry sector. You should also understand that ETFs cannot protect you from all possible risks. Major losses are still possible.

How much profit could I make from investing in Tesla?

Over the past five years, Tesla’s stock has delivered a positive return that has far surpassed the overall gains in US stock market indexes (see Table 4). So you could potentially achieve a high return as a Tesla shareholder. However, it is impossible to predict whether or not Tesla will achieve similar positive gains in the future. Note that the stock price can also fall, both over short terms, and in the long term. Investing in the stock market is always linked to a risk of losing money.

Table 4: Five-year performance of Tesla stock compared to select US stock market indexes

Performance data is based on the closing prices on November 16, 2018 and November 16, 2023. The USD/CHF exchange rates are based on the closing prices on the same days. Sources: Investing.com (index and stock prices), Finanzen.ch (currency exchange rates).

Tesla does not currently pay out dividends (November 2023).

What are the risks?

High potential returns are generally linked to high risks. Investing in individual companies, in particular, exposes you to a lot of risk. The company’s value can fall drastically over the short-term or long-term. Even a total loss is theoretically possible. You can minimize the risks by investing in funds like ETFs, but you cannot eliminate it completely.

Ideally, your investment strategy should not be based on one company or sector. Instead, you should look at Tesla as one more component you can use to diversify your investment portfolio.

You should also be aware of the currency exchange risk. Tesla’s stock is denominated in US dollars. If the value of the US dollar against the Swiss franc were to fall, that would have a negative impact on the real performance.

What are the tax considerations of investing in Tesla?

In Switzerland, private investors do not pay tax on capital gains from stock investments. Dividends are subject to a US withholding tax. You can recover part of the withholding tax via your Swiss tax returns. However, Tesla does not currently pay out dividends.

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