4 Trends that Can Define the Future of Investing
While nobody can tell you for sure what will happen with financial markets in the next couple of months, let alone 5-10 years, there are some trends that can point us in the right direction.
Twelve months or even a couple of years is a very short period from the perspective of investing, so it’s crucial to understand what factors will shape the future of investing and watch out for them.
For example, the world of crypto is still reeling from the downfall of one of its major players, FTX, which shook the industry to its core.
Despite the unpredictability of cryptocurrencies a couple of months ago, nobody could have predicted such a scenario.
Here are some industry factors that can give us a clue as to where it will be safe to tie up your money and expect it to work for you.
1. Artificial Intelligence
AI has disrupted almost every industry and transformed our world, and this revolutionary technology is still in its early phases.
Fortune Business Insights predicts that the AI market will reach $1394.40 billion by 2029, and this clearly indicates that investing in this field is worth considering.
If you’re wondering how to jump on the wagon and join investors, including AI companies in their portfolio, you can buy stocks of blue-chip tech companies, such as IBM, Nvidia, Amazon, or Micron Technology.
All these reputable companies are heavily involved in the AI boom by focusing on self-driving cars, AI-powered algorithms, voice-activated technology, healthcare platforms, and memory chips, to name just a few use cases of the technology.
Given that the demand for these products and services is slated to increase, it will be safe to hold on to these stocks within the next decade and minimize your risk.
2. Internet of Things (IoT)
This concept refers to physical devices connected to the internet that can be remotely manipulated and controlled.
This technology is enabled by the deployment of 5G and got an additional boost during the pandemic when different industries switched to the work-from-home model.
When it comes to investing in IoT, you can choose between three categories:
- Suppliers or companies that manufacture components used for connecting devices to the internet, such as Intel, Semtech, and Skyworks
- IoT enablement application platforms that provide the software for connecting devices to the internet, such as Amazon, Google, or AT&T
- End users or manufacturers of devices that can be controlled via IoT, such as GE or Apple
All these companies are big players in their respective industries, and all you have to do is think about which part of this supply chain you want to invest in.
3. Environmental, Social, and Governance (ESG) Causes
ESG refers to the practice of sustainable investing in socially responsible stocks.
In a nutshell, you’ll invest your money to support companies whose goal is to make a difference by improving environmental, social, and governance performance.
So, if you want to influence a positive change in our society as a whole and still grow your money, this is the way to go.
Start by analyzing:
- The company’s impact on the environment and how it tries to, for example, minimize its carbon footprint or harmful chemicals from its manufacturing process
- Whether the company champions diversity and supports racial, LGBTQ, or gender equality
- The company’s internal policies and procedures established to govern itself effectively and comply with the law
According to research studies, the stocks of companies with higher ESG scores have lower volatility, which is another benefit of investing for the greater good.
In 2021, biotech companies raised $34 billion in 2021. No wonder this growth was, at least partially, spurred by COVID-19 and relentless research for an effective vaccine, but this trend won’t be slowing down any time soon.
Here are some of the most popular innovative technologies that VC investors are particularly interested in:
- Gene therapies for treating genetic diseases
- Precision medicine – a branch that offers disease treatment tailored to the individual genetic needs of a patient
- Accelerating new drug discovery by leveraging machine learning to analyze massive sets of medical data
- Holographic surgery – a technology that generates 3D holograms of a patient’s organs in real time, thus allowing surgeons to identify tumors quickly and precisely.
While the biotech industry stocks can surge and bring investors a big profit, they can also be very risky because not all products in development get approved. Look for reputable companies that are more likely to create safe and effective products.
Exciting as they are, new technologies can be a mixed bag when it comes to their investment potential. Some will become wildly successful and bring their stockholders a fortune, while others will fail.
And there’s also a chance that a new Theranos will pop up and seduce even the most seasoned investors into funding it.
The best way to stay on the safe side is to diversify your portfolio and not put all your eggs in one basket, no matter how flashy it may seem.
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