Buying Apple (AAPL) stock has been one of the greatest investments of all time. Per The Motley Fool, the split-adjusted price of Apple at its initial public offering was $0.10, and as of Jan. 31, 2025, it was trading at $236. So since going public on Dec. 12, 1980, Apple has returned over 200,000% — an incredible performance.
Even billionaire Warren Buffett, one of the most successful investors of all time, has made Apple the biggest single position in the investment portfolio of his company, Berkshire Hathaway.
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But hindsight doesn’t matter if you’re considering buying Apple stock for the first time. So is buying Apple a good thing to do now, or are there smarter things to do with your money? Here are some options.
Also see expert predictions for where Apple stock could go in 2025.
Pay Off Debt
As impressive as Apple’s return has been over the years, paying off any high-interest debt you may have can be a much better choice for your money. Most credit cards now charge 20%, 25% or even more in interest annually. If you use your money to pay that debt down, you’re effectively getting a guaranteed return of 20% or more annually.
While Apple is certainly capable of posting a 20%-plus return in any given year, it may also lose that amount or more. Snagging the guaranteed return of paying down your debt can be a much wiser move over the long run.
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Build an Emergency Fund
The cornerstone of any financial plan is a solid emergency fund. Although most Americans know they should have one, many still don’t.
If you have an emergency fund, you’ll have cash on hand to deal with life’s little unexpected problems. If you don’t, you’ll risk going into debt if your car needs repairs or you bust a water main at your house.
And as soon as you’re in debt, your financial problems can rapidly spin out of control. A $2,000 credit card bill could double to over $4,000 in four years or less if you put it on a credit card.
Diversify
As strong a performer as Apple has been, dumping all of your investable money into it isn’t a very prudent financial strategy. Most financial experts, including Fidelity, recommend that investors diversify their holdings across various asset classes and types. This can help minimize your risk while maintaining your potential reward.
If you put all your money into one stock, even as blue chip a stock as Apple, you risk losing your entire bankroll. Granted, it’s unlikely that Apple will actually go bankrupt anytime soon, but it’s entirely possible that its shares could trade down 20%, 30% or even more.
If your entire portfolio is in just one stock, your whole financial life is a big bet on a single company. That’s not very prudent risk management.
Reasons Apple Might Not Even Be the Best Stock Investment Right Now
Let’s say you’ve decided to invest your money in a single stock, even though diversifying your portfolio is a safer option. In spite of its long-term track record, Apple may not be that single stock you should choose. Primarily due to its price-to-earnings (P/E) ratio, many analysts feel the stock is currently overvalued.
Morningstar, for example, sees Apple’s fair value at $200 per share, about 13% below current levels as of Feb. 11, 2025. This is based on the view that Apple should be trading at about 23 times earnings, well below the P/E multiple it currently sports.
But Morningstar’s analysts are far from alone when it comes to some level of pessimism regarding Apple. According to The Wall Street Journal, 21 out of 50 analysts covering the stock have “Hold,” “Underweight” or “Sell” ratings, a surprisingly high percentage for such a stock market darling.
Most anyone who has invested in Apple for any significant amount of time has likely made good money. And Apple still certainly has a lot going for it, from a rabid fan base to its immense pile of cash. But this doesn’t mean that it’s necessarily a great place for your money right now, especially if you have high-interest debt and no emergency fund.
Most experts agree that you should build a solid financial foundation, diversify your portfolio and evaluate the risk-reward characteristics of Apple at these lofty levels before investing your money.
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This article originally appeared on GOBankingRates.com: 3 Smarter Things To Do With Your Money Than Buy Apple Stock
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
