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Adobe (NASDAQ: ADBE) stock recently hit its all-time high closing price of $383.28 on February 19, 2020. That fact alone could mean the stock is a worthy addition to your portfolio. Benzinga’s put together a step-by-step guide — maybe investing in Adobe will be your best move yet this year.
How to Invest in Adobe
We broke down the steps you’ll need to take if you want to invest in Adobe. First, let’s take a look at the difference between purchasing via direct investment and a brokerage.
A direct investment might be the right option for you if you want to become a stakeholder. Direct investment means you’re involved beyond just earning money and interest from your investment. As a direct investor, you become informed and involved in decision making — such as when a company considers physical or manufacturing expansion.
While a direct investment can have its benefits, most people feel more comfortable investing through a brokerage. A broker acts as the middleman between you as the investor and the stock market. There are different types of brokers and brokerage firms you can choose from. You can choose the brokerage model that offers the benefits you want:
- Discount broker: Discount brokers provide an affordable option for investors who don’t need any sort of hand-holding. A discount broker won’t provide you with investment advice or review your portfolio. Instead, you’ll be making your investment and trading decisions completely on your own. You might think of a discount broker as a machine that processes and completes your orders for you.
- Full-service broker: A full-service broker may be what you’re looking for if you’d like to receive comprehensive advice and guidance. Your full-service broker can meet with you to discuss your investment goals, help you research investments with your goals in mind and offer you personalized advice.
We encourage investors who use full-service brokers to consider using a broker that has a fiduciary duty. Brokerages with fiduciary duty have a legal responsibility to put your financial interests ahead of their own.
Now, let’s explore how to purchase Adobe stock through a broker.
- Choose your brokerage.
First, you’ll need to decide which type of brokerage you want to work with. Answer these questions to help guide your decision:
*Do I feel comfortable researching and making investment decisions on my own?
*How much am I willing to spend on my broker?
*Would it be wise to have an experienced professional who can recommend investments to help me meet my goals?
Again, if you want more support, go with a full-service broker. Discount brokers offer less guidance but can be an inexpensive way to get started.
After you’ve figured out which type of brokerage is best, select your actual broker. Research your broker or brokerage firm to better understand the services each one offers. Online reviews can provide feedback to consider if you don’t have a personal recommendation from someone you know and trust.
- Step 2: Open your trading account.
After you choose your brokerage, you’ll open your trading account. This process is usually pretty simple.
Most brokerages have a website where you can access your trading account. Signing up is normally as easy as clicking on an “Open an Account” button or menu. Follow the sign-up process, select your account type and provide basic information such as your name and address.
After you’ve completed the initial sign-up process, check your email for a confirmation from your brokerage. The email will include a link to confirm your account. You should also expect to send in proof of identification to help prevent financial fraud.
- Add funds to your account.
Before you can buy stock or start trading, you’ll need to have money in your account. First, visit your brokerage’s website again and log into your account. There should be an option to select the type of payment method you want to use to invest.
Give yourself a budget that doesn’t cut into what you need for your daily living expenses. Make a plan to invest without worrying about serious financial setbacks if your investment doesn’t provide the expected returns.
- Access your trading platform.
Here’s where it starts to get fun! Your broker will give you the account information you need to access your trading platform.
Before you can start trading, you’ll need to get familiar with the platform. Most trading platforms offer both desktop and mobile versions.
Desktop: Your broker’s website should have a link you can click to download the installation file for your trading platform. After it downloads, launch the file to go through the installation process. A .exe file will be created on your desktop. When it’s done installing, you can launch and log into the trading platform using your account information.
Mobile: Download the trading platform app on your mobile device. When it’s finished downloading, you can launch it and log in using your account information.
- Buy Adobe stock.
Now you can finally buy Adobe stock! When you’re in the trading platform, look for the market watch section. Type in Adobe’s trading symbol, ADBE. Open the trading box by clicking on the symbol.
Your next step is to select the number of shares you want to buy. A full-service broker should be able to give you some guidance on how many shares you may want to buy. Enter the amount you decide on in the fields in the trading box and implement the trade.
Note: It’s a good idea to avoid investing your funds into a single trade.
Pros to Buying Adobe Stock
Every company has its strengths and weaknesses — Adobe is no exception. Here are a few qualities that make Adobe a strong choice.
- Long-time innovator: Adobe provides innovative software tools and has for decades. These tools are considered to be the gold standard in many industries. As trends continue to change, there’s a growing demand for more innovative digital tools and there’s a good chance that Adobe will continue to prove its worth.
- Positive financials: As mentioned earlier, Adobe recently reached its all-time high closing price of $383.28 — an indication that its financials are strong.
Cons to Buying Adobe Stock
You always assume some degree of risk when you buy stock. Here are a few things to consider if you’re looking at Adobe.
- Unstable economy: Adobe gets a lot of its business from global markets. Coronavirus and other global scares can turn out an unpredictable market, so keep a close eye on the economy and any fluctuations in the stock market. Consider taking a close look at the stock’s recent history to see how it’s trending. You can also research predictions for how Adobe’s stock will perform in the coming weeks and months.
- Competition: Although Adobe is quite popular in some industries, others might prefer to purchase software from its competitors. Adobe shares its market with free software offerings, as well as major companies such as Microsoft and Apple. Watch how Adobe performs against its competitors. You might consider researching recent press releases to see which company offers the best, most innovative products.
History of Adobe’s Stock Price
Adobe went public on August 20, 1986. Its adjusted closing price on its first day was $0.21. Since that time, the average Adobe stock price has risen at a fairly consistent rate, with the exception of a few fluctuations along the way.
In current years, Adobe’s average stock price increased. It went from an average stock price of $97.33 in 2016 to $143 in 2017.
Adobe’s average stock price is $354.92 in 2020.
How to Choose the Best Broker for You
You might still wonder how to find the right broker for you. Make a list of the factors most important to you. These might include:
- Broker commission price
- Research and trading tools offered
- How your broker can advise your trading decisions
- Whether your broker has a fiduciary duty to you
Once you know which factors are most important to you, you can compare brokers. Some brokerage firms offer virtual trading to allow you to get a feel for the trading process before you start actually using your money. Others have a wide range of research tools to help you perform your own research to inform your investment decisions. There’s a broker out there for each investor, but it might take a little bit of digging to find the right one for your needs.
Is Adobe Stock Worth It?
If you take a look at its price history, it’s certainly easy to see that Adobe has seen a surge in the past few years. If you’re still on the fence about whether you should buy Adobe stock, revisit these guiding questions:
- What are your investment goals? For example, do you want to build an income from your investments? Your goals should guide you toward the types of stocks to buy.
- Which industry or industries are you most familiar with? It’s easier to understand and follow a company’s performance if you’re already familiar with the industry. Buying stock in a familiar company might be a good option if you’re just getting your toes wet in the world of investing.
- Does the company have a trend of long-term stability? Stable investments are usually a good idea, especially if you’re nervous about making a risky investment.
Bring your financial goals in focus with the right broker and tools to help you make your Adobe stock purchase with confidence.