Four reasons why investing in the tech sector is a smart move

tech stocks

When it comes investing your money, there are many options to consider. Whereas some more adventurous people may go for fine wine or classic cars, for most, the stock market is still the first place to head. The reasons behind this are as they have always been – investing in stocks is simple to understand, does not require huge amounts of capital and offers the chance of decent returns. It is also more accessible than ever, thanks to the way online trading has opened the industry up to the average person on the street. Best is to use a highly established online trading platform such as interactive brokers new zealand.

The figures around the global stock markets bear this out. The NASDQ, for example, is worth around $10 trillion and has thousands of companies listed on it. In total, the 60 stock exchanges found around the world have a net worth of almost $70 trillion!

What sectors to invest in?

Of course, investing in the stock market requires lots of planning and prior research to succeed. Chief among this is choosing which types of stocks you will focus on. If you want to invest wisely this year can inform you how to invest and buy stocks in Canada. You can save time by using one of the Stock Apps. Many experts will actually advise choosing a few different sectors so that you hold a diversified portfolio. One increasingly popular area for investors is technology.

For some people, this may still sound the alarm bells! Famous names such as Warren Buffett have avoided tech stocks for years but this does not mean they are a bad investment. Indeed, as the world becomes more technologically driven, tech companies actually represent a smart investment for the future.

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Four reasons why tech stocks make a good investment

If you want to know why tech stocks make a smart investment, this may help:

  • Rapidly growing sector – in 2018, the US tech sector is due to grow by almost 7%. This is the largest growth in the sector since 2012, which is indicative of its health. These types of figures also show that tech is a sector that is on the up, and one that provides the opportunity for some pretty good returns when looking to the future. With technology such as driverless cars and the IoT becoming more common, tech seems to be a valuable sector.
  • Not all tech stocks are complicated – one big factor that many casual investors were put off by was the notion that all tech companies had a complicated structure or business model. While this can be true for some, it is not for the big players such as Apple or Facebook. In simple terms, if you can understand a stock and how the company makes money, while thinking this will continue, then it is a smart investment. Just being a tech stock does not change this.
  • They can give prolonged growth – the easy way to tell if an investment is a smart move is by the growth it is expected to make and the returns it will give. Tech stocks can perform just as well in this area as any other stock. In fact, with the rise in the popularity of the sector and the increasing reliance we all have on technology, this makes it a hot sector for growth, compared to others. Although this requires a long-term view on investing, putting money into tech shares can really pay off when you come to liquidate your investment.
  • Market disruption of other industries – another reason why tech companies make smart investments is how the best continue to find new ways to make money. This, naturally, is reflected in an increased share price and profits for you as an investor. Look at how Amazon started out with e-commerce originally but has since expanded into streaming services and additional sectors to fuel future growth. The ability that the tech sector has to cross over into other areas makes investing money here a wise move for the future.

Why not get professional help on tech investments?

As with investing in any sector, you need to find the right tech companies to put money into. We have already mentioned some of the big players who usually see good annual returns, from Apple to Amazon. However, if you would like professional help in choosing the best performing tech stocks out there, it may be wise to use an external wealth management company or find a broker instead of doing it yourself. Industry expert Peter Mallouk is President of Creative Planning – as one of the leading names in the investment world, they can offer reliable advice in this area. If you are unsure as to which tech companies to invest in or whether it is right for you, these are the people to speak with first.

Tech sector is hot

With the figures for 2018 looking good in terms of sector growth, it certainly seems that the tech market is worth looking into for investors. It is also a sector that looks likely to be riding high for years to come, as we become increasingly reliant on technology to go about our daily lives. From AI to Internet providers, telecoms companies and big global tech brands, we have an actual need for the services they offer. This means that informed speculation in this sector could produce handsome returns over the course of the investment.

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