3 Reasons I’m Buying Tesla For My Retirement Portfolio

3 Reasons I’m Buying Tesla For My Retirement Portfolio

Posted On May 20, 2021 3:38 am

Diversifying by alpha factors is a proven way to outperform the market over time. A multi-factor approach has beaten the market by 1.6% annually since 1996.

Hyper-growth blue-chip investing, when done correctly, can make for a rich retirement. When done poorly, ignoring valuations, it can crush your retirement dreams.

Tesla is a speculative 9/12 hyper-growth blue-chip run by one of the most innovative minds in the world. Analysts expect Tesla to grow at 40% over time.

Tesla’s market-determined fair value is $361 in 2021. Buying at fair value offers a consensus return potential through 2026 of 202% or 22% CAGR, almost 5.5x that of the S&P 500.

Tesla’s complex risk profile means that a 25% margin of safety, $271 in 2021, makes it a potentially good but speculative buy. One that offers 303% consensus return potential through 2026, or 28% CAGR (17% risk-adjusted expected returns).

I’ve placed a limit to buy a starter position in Tesla at fair value for my retirement portfolio, and a 2.5% or smaller position at that price may be appropriate for anyone comfortable with Tesla’s complex risk profile.

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About author

Dividend Sensei
Dividend Sensei

I'm an Army veteran and former energy dividend writer for The Motley Fool. I'm a proud co-founder of Wide Moat Research, Dividend Kings, and the Intelligent Dividend Investor. My work can be found on Seeking Alpha, Dividend Kings, iREIT, and the Intelligent Dividend Investor. My goal is to help all people learn how to harness the awesome power of dividend growth investing to achieve their financial dreams and enrich their lives. With 24 years of investing experience, I've learned what works and more importantly, what doesn't, when it comes to building long-term wealth and income streams and achieving long-term financial goals.

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